Confusion around underwriting and pricing is discouraging many UK consumers from taking out life insurance, new research commissioned by UnderwriteMe reveals.
The study amongst 2,000 UK adults found an array of gender and generational challenges emerging. Over half of women (55%) stated they would be frustrated if the price they are initially quoted for life insurance increased after they answered personal questions covering occupation and health through to travel and lifestyle, compared to 47% of men respondents. Further analysis shows that women are also more likely than men to cite cost as a barrier to purchasing life insurance (34% compared with 30%).
When looking more widely at the purchase of life insurance, pricing uncertainty emerged as a clear frustration across all adults, with just over half of respondents surveyed (51%) saying they would feel frustrated if an initial quote increased after providing extra personal information. Within this group, almost a quarter (24%) said that change would be very frustrating.
As well as feeling frustrated, the research also found a high level of confusion amongst UK adults around how life insurance pricing operates. Two thirds of consumers (66%) recognise that personal factors such as medical history, occupation, hobbies and family health can influence life insurance pricing, yet many remain unclear. Almost a quarter (24%) said they were unsure how these factors affect the price they are offered, whereas 10% said they didn’t believe they did.
Barriers to take up
The study found that overall more than three in five UK adults (61%) face at least one barrier when considering purchasing life insurance. Whilst price was the key driver, with 32% of adults worried it will be too expensive, more than one in five (21%) said they were unsure whether insurers would pay out, while another 14% described the process as complicated or overwhelming. A further 14% said they would not know where to begin or who to trust when looking into cover and for some, while for 1 in 10 (11%) the issue is simply timing, stating life insurance is something they plan to deal with later rather than now.
Generational differences
When it comes to the purchasing journey, younger adults are more likely to feel unsure about how to begin the process (20% of 18-34 year olds stated this, compared to 15% of 35-54 year olds and 8% of those aged 55 and over).
Cost concerns around life insurance are highest among Millennials (36%) and Gen X (36%), compared with around a quarter of Boomers (26%). Gen Z are more likely to describe the process as confusing or overwhelming (23%), reinforcing the idea that younger consumers may struggle more with navigating protection decisions and the importance of having cover. Uncertainty around whether insurers would pay out is also most pronounced among Gen X (27%).
The research findings point to an opportunity for advisers and providers to communicate more clearly around pricing, expectations, and the application experience, helping consumers feel more confident about engaging with protection earlier rather than postponing decisions.
Nilesh Patel, chief revenue and customer officer at UnderwriteMe, commented: “Most people understand why life insurance matters, but lack of clarity around how the process works is putting people off, leaving them lacking vital protection from a product that should be essential.
“Cost worries play a big part here, but uncertainty about what will influence the final price can be just as significant. When quotes change or the purpose behind certain questions is not fully understood, it can create doubt. For some people that doubt is enough to delay a decision, even if they recognise the value of having that protection in place.
“There is also still a clear confidence gap around underwriting. If the process feels unfamiliar or unpredictable, people can assume it will be more complicated than it is. Technology is now enabling real-time underwriting so this is a solution that can help deliver results quickly and help advisers with getting applications over the line without delays.”
Roy McLoughlin, board member of the Protection Distributors Group, commented: “PDG’s recent Protection Insights Report highlighted that despite adviser optimism around protection, there is room for improvement across the market. The lack of adviser confidence in underwriting was also a key issue, with nearly 6 in 10 (59%) respondents saying inefficient underwriting was a key barrier to writing more protection. There is clearly frustration amongst advisers about unnecessary underwriting delays, additionally ratings and premiums can be difficult to explain to the customer six months down the line once the underwriting is completed. This can in turn cause consumer confusion around the process and pricing.
“If the fear is consumers are abandoning the journey due to confusion around the process or pricing it is incumbent that the advisory community, in collaboration with insurers, work together to make the taking out of protection a far smoother process than it currently is. Underwriting needs to be slick, speedy, and easy to navigate which will certainly help adviser confidence and consumer confidence and uptake of protection policies.”
