"This should matter to the government as much as it matters to households. When families have suitable cover, illness, injury or bereavement are less likely to push them into financial crisis."
- Craig Hall - LSL Financial Services
If there’s one challenge all advisers recognise when it comes to protection, it’s optimism bias. Many people understand the value of cover in theory but are still held back by deeply human instincts like over-optimism, avoidance and the belief that serious illness or loss happens to other people.
Rarely do clients reject protection because they’ve weighed the risks and decided they’re content without it. More often, they avoid the subject because they don’t want to consider losing their income or leaving their family exposed.
It’s also a sensitive subject for advisers. Understanding protection and knowing its importance doesn’t necessarily make the conversation easy to raise. There can still be a worry about bringing it up at the wrong time, making the client uncomfortable, or seeing it dismissed as another cost.
Despite the tools and expertise already being there to help, we’re left with a market in which millions remain under protected.
That core issue surfaced time and again at our inaugural LSL Protection Forum in May, which brought together advisers, providers and industry voices to discuss how we can improve protection outcomes.
One question that struck me was whether protection should follow the auto-enrolment route that has proven so successful in pensions.
It’s a rational comparison to make, since auto-enrolment has been a major success. Changing the default from 'out' to 'in', has brought millions more people into retirement saving and helped normalise long-term financial planning.
But protection is different. It’s a tailored assessment of a client’s risks, responsibilities and financial resilience, and of what would need to happen if illness, injury or death changed their circumstances overnight. It can’t be reduced to a simple default.
Getting protection wrong can also have severe consequences. A policy that doesn’t properly reflect a client’s circumstances may fail to deliver when it’s needed most. Worse still, they may only discover that at the claim stage.
Compulsion would miss the point, as would removing advice from the part of the process where it matters most. The better solution is to make the conversation more normal, better understood and easier for clients and advisers to engage with.
A core barrier we need to overcome as part of this is the belief that insurers don’t pay claims.
Across LSL Financial Services, Primis and TMA Club policies written by advisers led to more than £170m being paid in claims over the past 12 months, across more than 3,500 claims.
Numbers from the wider industry tell a similar story. Data from the Association of British Insurers shows a record £8bn in protection claims was paid out during 2024, and also 96.9 per cent of new protection claims were paid.
This should give the market reassurance that protection works, and that claims do get honoured. The problem is that too few consumers hear this message clearly, often enough, or before they need it.
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The Income Protection Task Force’s Protection Awareness Week already does valuable work in raising the profile of the issue. The Association of Mortgage Intermediaries’ annual Protection Viewpoint likewise provides meaningful insight into consumer understanding and the barriers holding the market back.
However, both initiatives underline the same point that valuable industry projects can go only so far without broader public reach. The size of the protection gap suggests this conversation needs more than one week a year, and to reach more than just an industry audience.
This makes for a strong case for a long-term public campaign, with advisers, providers, trade bodies, regulators and the government promoting the core fact that protection is an integral part of household financial resilience.
The recent Savvy Squirrel campaign offers a useful parallel. Backed by both the Treasury and the Financial Conduct Authority, its aim is to help people think more clearly about long-term financial decisions and feel more confident in investing. Protection needs a similar shift in public understanding, with clear education about the role of advice and the value of having the right cover in place before it’s needed.
This should matter to the government as much as it matters to households. When families have suitable cover, illness, injury or bereavement are less likely to push them into financial crisis. That reduces pressure on employers, on savings, and ultimately on the state.
Advisers continue to remain central, being the ones who can turn a broad public message into a personal conversation that’s grounded in a client’s mortgage, income, family and future plans. They can show that protection is a practical part of financial planning, rather than a remote or uncomfortable subject to avoid.
The LSL Protection Forum showed that the industry is prepared to take this more seriously. The claims data is on our side, and the advice community is ready. What’s missing is a larger, clearer public effort that helps people understand protection while they still have time to act, before life may sadly make the case for them.
