55% of adults more aware of the risk
The impact of COVID has made 55% of adults more aware of the risk of being unable to work due to illness, according to Justin Harper, propositions and marketing director at LV=, which could have a direct impact on their ability to meet mortgage repayments.
This rose to 74% when those surveyed were between the ages of 25 and 44, data collected by the insurance company showed.
Since the start of the pandemic in March 2020, LV= has paid out over £19 million in claims which cover life insurance, critical illness and income protection. It had paid nearly 2,000 pandemic-related claims up to March 15, 2022, with this figure including 1,400 death claims, for which the insurance company paid out £18 million.
The increased awareness of the need for protection has made people reorder their priorities, according to Harper.
“The pandemic has made many think again, with households choosing to prioritise their financial resilience over the last two years,” he said.
Over the course of 2020, LV= paid record individual protection claims, totalling nearly £118 million.
According to the insurance specialist, it supported more than 9,000 claimants and their families - paying 95% of all individual protection claims including life, critical illness and income protection.
Read more: LV= paid record amount of individual protection claims during 2020
With many individuals’ health being impacted over the course of the pandemic, insurance companies across the world have seen an uptick in claims.
“While growing awareness among younger people is a good start, we should be doing more as an industry to educate the wider public about the benefits of protecting income,” Harper said.
He believes one of the few positives to come from the pandemic is the increased awareness of the need for protection and insurance. People in the UK are also facing increased pressure from rising living costs, with inflation increasing at its fastest rate for 30 years amid surging fuel, energy and food prices, which only places further emphasis on cover.
Read more: LV= upgrades life insurance terms
“In the current environment of living costs increasing, it is more important than ever for people to have protection cover in place,” Harper said.
From April 01 it has been widely reported that gas and electric are set to rise drastically, however less commonly written about is the rise to council tax, water bills and national insurance as well.
Average household water and sewerage bills in England and Wales are set to rise by around £7 a year, equating to 1.7%, from April. The official cap on how much local authorities can increase council tax by, meanwhile, is 5% - this is made up of a 2% council tax rise and an additional 3% for social care.
Finally, from April 06, 2022 to April 05, 2023, national insurance contributions will increase by 1.25 percentage points. This will be spent on the NHS, health and social care in the UK.
“Being unable to work through illness or injury could have devastating effects on households, as they will continue to be financially squeezed by the effects of inflation,” Harper concluded.
