Nearly Half Of The UK Does Not Have Life Insurance Cover

It has been revealed that life insurer Pru Life UK witnessed a 15.8% increase in net profit in 2008, despite a drop in single-premium sales resulting from the weak investment market.

Pru Life UK President Nishit Majmudar said the drop was due to lower sales: “This is because single premium sales were much lower in 2008 than in 2007, ”, he said.

The slowdown in take-up on single-premium insurance echoes the hostile industry, but Majmudar said that the company still benefited from the highest number of single-premium policies than any other competitor.

The company’s president seemed confident that his firm was a strong contender in the life sector and is here to stay, as he estimated the business ranked third based on first year premiums sales plus 100% of single-premium.

The insurer has also reported new found money from unit-linked business before insurance charges: “Considering the financial turmoil that started in 2008, this still would prove the investors’ confidence in our linked funds,” he said.

Despite an increase in sales, not many are buying

Despite life cover sales increasing elsewhere in the world, a recent survey from a leading life insurance company has revealed that many Brits do not bother buying such protection.

The study found that half of the British population would have no financial security in less than a month if their income were to dry up.

The research displayed that nearly half of UK residents (45%) have not purchased any form of protection cover, which includes policies such as income protection, life insurance critical illness cover.

72% stated that they save less than £100 a month, with half of these saving nothing for the future. Worryingly, 49% of adults have less than £1,000 in investments and savings.

Shockingly, only one third of the British public believe they have some sort of financial provision in place to cover their mortgage.

However, the average yearly household spending budget is around £450 a month, leaving millions with just enough money to survive less than a month is the worst should happen, and with redundancy and financial strains putting pressures on households, this is a real possibility.

One financial analyst said the problem of rising unemployment and dwindling savings was “only going to get worse.”

Gap in life insurance

It appears that people are hesitant to invest in protection policies when left to their own choices, according to the survey.

Only 5% committed to purchasing critical illness cover, 7% opted to buy life insurance cover and 10% were prepared to purchase an income protection policy.

Iain Mallon, head of protection at the insurance company said that education was key when making people understand that their life and future is worth protecting: “This is a serious issue for the UK public and one that needs to be addressed if people are going to be properly protected.”

He furthered: “Financial provision is generally seen as rather dull and low priority. But every year thousands of families are financially affected by the loss of income from a breadwinner. In the current economic climate this is only going to get worse.”

by: Catherine White