Karen Hatch Photography
Canadian novelist and playwright Robertson Davies wrote that, “The eye sees only what the mind is prepared to comprehend.”
Pretty sure he wasn’t thinking about the UK protection market — but his words are apt, nonetheless.
As irrational human beings, we are not always interested in logical or even consistent thinking. Few of us would contemplate buying a brand-new, £30,000 car but then not comprehensively insuring it; yet a home worth upwards of £300,000, with little or no protection cover taken out, is often deemed an acceptable risk.
The government needs to get on board. Move away from the idea that, ‘The state will look after you’
Admittedly, car insurance is mandatory, so premiums are always factored into the equation. With income protection (IP) and critical illness (CI) cover, however, it is different.
Typically, they are regarded as an ‘option’, and too often a non-essential one. The value of protection (or the danger from not having any) is often realised only when it is too late.
To discuss the matter in depth, Mortgage Strategy (in conjunction with the Association of Mortgage Intermediaries [Ami]) set up a roundtable entitled, ‘The protection gap – moving from awareness to action’. It was hosted by insurer Royal London in its Fenchurch Street office in the capital.
Attendees from all sides of the protection sector were asked to debate how best to tackle the UK’s enduring ‘protection gap’.
Public perception and cost
Panel members agree first that public perception is a key area.
Specifically, there is a need to reposition insurance products as lifestyle protection — not seen as something payable only on death but as something that keeps a family lifestyle in place and buys time during which the insured can regain their health without worrying about money.
Customers don’t know how much things cost and surely it’s the job of the adviser to demonstrate the value to them?
In addition, and from the adviser’s perspective, there is a vital need to better present the cost of not being protected. What is the price tag on peace of mind?
This messaging is not helped by a mainstream media that too readily focuses on ‘negative’ stories of insurers not paying out.
In fact, for IP, UK insurer payout rates are commonly in the 85%–96% range, depending on the provider. Meanwhile, for CI, insurers typically pay on around 90% of claims.
With regard to pricing, LifeSearch’s Justin Harper believes the public’s typical misconception on cost comes into play even before the broker gets to the advice stage.
“There is a vast overestimate on price,” he says. “The common response is, ‘It is too costly and I’m going to get ripped off.’”
And Legal & General’s (L&G) Julie Godley stresses: “In many instances the premiums are actually too cheap. Margins are getting tighter and tighter. Cost is not the issue; it is perception of value.”
The one thing most people can’t afford to lose is their income — yet it’s the thing they protect the least
Vitality’s Andy Philo echoes Godley’s point.
“There has been a race to the bottom on price — but the market hasn’t really grown,” he says. “The cost to onboard is expensive for an insurance company.
Often a lot of work is carried out and then the client may decide not to proceed.”
LV=’s Mike Farrell is keen to pick up on this disconnect between actual cost and perceived value.
“IP prices have come down and CI premiums have plateaued,” he says. “From the consumers’ perspective, even if you halved the price I’m not sure people would buy more. Customers don’t know how much things cost and surely it’s the job of the adviser to demonstrate the value to them?”
When Covid-19 was at the forefront of people’s minds, protection sales increased markedly, indicating that consumer reality checks do happen — at least on some occasions.
There is a vast overestimate on price. The common response is, ‘It is too costly and I’m going to get ripped off
The case for protection is a strong one, but a philosophy of ‘putting things off for now’ is both very British and exasperating for the industry. According to research by the Association of Mortgage Intermediaries (Ami), many consumers drop out of the protection-buying process — nearly one in five, rising to one in four among the under-35s.
As Ami’s Stephanie Charman points out: “In a world where everything is getting more expensive, the one thing most people can’t afford to lose is their income — yet it’s the thing they protect the least.”
Cost of living
On the subject of things getting more expensive, how has the rising cost of living impacted protection take-up?
In Ami’s Protection Viewpoint research, 78% of consumers say the current economic environment has had an emotional impact on them when thinking about making financial decisions.
If protection is typically regarded as an option rather than a necessity, the logical conclusion is that this translates into cover not being taken out.
Consider the breakdown of the most common financial products held by UK adults — contents insurance, 59%; buildings insurance, 52%; CI, 9%; and IP, 8%.
There has been a race to the bottom on price — but the market hasn’t really grown
As L&G’s Vikki Jefferies explains, cost-of-living pressures are affecting everyone, and that means SMEs too, including brokers.
“Time and resources are often stretched, so to some degree you can understand why some brokers are putting protection onto the back burner,” she says.
She adds that the entire industry must assist brokers’ efforts to improve their efficiency and find time to advise confidently on protection.
‘Difficult conversation’
Jefferies also encourages networks to further guide advisers on how best to tackle the well-known ‘difficult conversation’ about CI and IP.
Royal London’s John Fuller points out that, when evaluating the cost and the benefit of cover, there needs to be an overlay of psychology.
The messaging should be, ‘Here is an affordable option to mitigate the risk
“Whole of life is a logical sale, but everything else (protection-wise) is emotional,” he says. “Advisers have got better at selling the protection proposition rather than the product.”
This was the consensus of the panel but there was also general agreement on the significant room for improvement.
Advisers need to find a process that works for their business. However, success will come from clear signposting and the introduction of protection at the start of the mortgage conversation.
As Charman explains, the adviser must “create the need, so, ‘I’m going to help you buy this house but also protect your family and your income’”.
Philo says the initial conversation must be both honest and direct.
“If you can’t afford the protection, you can’t afford the mortgage. In the 1970s a mortgage was three times your income; now for some it is maybe six or seven times. So, for someone who is off sick for any period, it is incredibly risky.
We are certainly in a better place than we were five to 10 years ago
“The messaging should be, ‘Here is an affordable option to mitigate that risk.’”
Life circumstances typically change for homeowners — both for the better and for the worse.
An honest appraisal at the start of the homebuying process, followed by ongoing reviews, can identify potential stress points.
It is important that consumers who may one day face a rate shock ensure they have adequate financial protection. They must understand budget challenges — for example, according to the Bank of England, 420,000 households are predicted to experience monthly mortgage payment increases exceeding £500 between now and the end of 2027. How much of a shock will that be, and what if changing health factors impact income too?
The roundtable panel accepts that, although the majority of mortgage advisers do introduce protection into the client conversation, this has not translated into major increases in cover. In Ami’s 2025 Protection Viewpoint research, the proportion of advisers who say they advise on protection directly with their customers has increased substantially — 82% in 2025 versus 66% in 2023.
If we could access NHS records, that would make an amazing difference
However, only 39% of consumers recall protection being mentioned by their mortgage adviser.
This represents only a small increase over five years, up from 36% in 2020.
As Charman explains: “Advisers are clearly having these conversations, yet something isn’t resonating with customers. It’s a reminder that we need to keep the customer at the heart of every conversation and continue helping them truly understand what not being protected could mean for their future.”
And it is not as if protection uptake is gaining much traction when the intermediary is taken out of the equation. Around 80% of protection sales are delivered via advisers, with only 1% through price comparison websites.
Adviser actions
Clearly, the intermediary’s role is crucial, and the Financial Conduct Authority’s findings reinforce the role of advice.
The regulator highlights that consumers rarely consider protection proactively and that intermediaries play a key part in navigating complex options. So, what can, and should, be done better?
The cost to onboard is expensive.
Often a lot of work is carried out and then the client may decide not to proceed
One positive step could be to refer more often to specialists. Jefferies suggests advisers should not be afraid to make a fair appraisal of their own strengths. Specifically, they should not feel pressured to act as a protection adviser if that is not their strong point.
“Some advisers think they ought to be doing protection. It doesn’t mean they aren’t a great mortgage adviser if they don’t — they could have the initial conversation on protection and then refer to a specialist.”
Royal London’s Setul Mehta accepts that brokers’ time burden is a factor and believes that a specialist protection adviser is often better able to articulate the value.
But he also observes that artificial intelligence (AI) can benefit the time-challenged adviser.
As the Ami research highlights, the future of the sector depends on a hybrid approach, combining technology with meaningful human interaction. Technology should be leveraged to boost efficiency while preserving the personal connections that drive consumer confidence and informed decision making.
There is consensus from the panel that AI could save brokers’ time. But, as Godley points out, there is no easy fix when it comes to medical underwriting.
Time and resources are often stretched, so to some degree you can understand why some brokers are putting protection onto the back burner
“If we could access NHS records, that would make an amazing difference,” she says.
Another useful step could be to ensure that, if consumers were using price comparison websites and received a decline, they would be signposted to an adviser, with clear disclosure that this might not be the only solution for them.
To raise awareness, timely nudges could help, such as on documents like a P45 — mentioning, ‘Now you’ve changed your employer, do you know your new benefits, sick-pay conditions, etc?’ This requires buy-in from outside the sector, which wasn’t lost on the panel.
Normalising protection
The common message from the roundtable is that the UK needs to normalise protection, and this will require broader stakeholder support, notably from the government and the regulator.
As SJP’s David Mead points out: “We need government help to get the message across. It is encouraging that the FCA is keen to engage with the government to increase awareness.”
How do we ensure we nudge customers right through their life journey?
And he highlights another good reason for the regulator and the government to be so engaged.
“The social security bill is growing and the burden could be shared — with the government effectively subcontracting out the risk to insurers.”
Farrell takes a similar line.
“The government needs to get on board.
Move away from the idea that, ‘The state will look after you.’”
The panel agree that more TV, radio and online campaigns are needed, with better-targeted marketing — and timely reminders.
As The Exeter’s Jamie Page puts it: “How do we ensure we are nudging customers right through their life journey?”
Philo suggests more personalisation could help; taking the Amazon-style approach, a variation of, ‘People like you also bought these products’ — softly persuasive but also making customers feel part of a peer group.
Cost is not the issue; it is the perception of value
If personalisation makes it more real, what role can social media and ‘finfluencers’ play, particularly for those yet to enter the workforce and homeowning community? As one attendee warns, too many of Generation Z accept information on TikTok as gospel.
Consequently, Harper stresses that, while multichannel media has advantages, who should be defined as trusted voices? It is not lost on the roundtable panel that one of the most faked online identities right now is that of Martin Lewis, the personal finance champion.
Safeguards on messaging are important, as is improving financial literacy. As ‘personal finance’ enters the classroom, is this an ideal opportunity to explain, in the simplest way, why protection/pensions/savings are so vital?
Then there is the Consumer Duty and its impact on the protection market.
The intention is for a better focus on customer needs rather than product sales, improved documentation of suitability and a greater emphasis on vulnerable customers. It is hoped it will simplify application journeys and reduce jargon and unnecessary complexity.
It is early days but Mehta believes that, as a set of principles, the Consumer Duty has brought improved guardrails. And he points out that, before its implementation, no attention had been paid to, for instance, consumer reading ages and where areas of understanding had been weakest.
Advisers have got better at selling the protection proposition rather than the product
“We are certainly in a better place than we were five to 10 years ago,” he says.
All these efforts to engage and explain should, in theory, put the consumer in an improved position. The more informed, the more engaged and the more trusting they are, the greater the likelihood that the protection gap will close.
There is still a long way to go but, if brokers, insurers and networks work alongside the regulator and the government, great things may be achieved.
Mortgage Strategy would like to thank all the participants in the roundtable, and Royal London as host.
We look forward to the follow-up!
broker survey
When questioned by Mortgage Strategy, 78% of brokers thought that consumers did NOT regard the value of protection as greater than the cost.
This article featured in the June 2026 edition of Mortgage Strategy.
If you would like to subscribe to the monthly print or digital magazine, please click here.
Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by finopulse.
Publisher: Source link
