The Exeter’s latest Health and Financial Fears report highlights a worrying trend among UK workers, with over a quarter (26%) cancelling their insurance policies in the past year due to financial constraints.
This marks a noticeable increase in policy cancellations related to rising living costs, nearly doubling from 4% in 2022 to 7% in 2023.
Additionally, there’s been a concerning uptick in workers reducing pension contributions, from 4% to 9%, further underscoring the impact of the financial squeeze on long-term financial planning.
Amid these budgetary cutbacks, there’s been a notable shift in insurance preferences, with an 11% rise in demand for private health solutions and a 5% increase in cash plan uptake, suggesting a reevaluation of insurance needs with a focus towards health-related coverages over traditional life insurance and income protection.
The report also sheds light on the reasons behind policy cancellations. Nearly a quarter (24%) of those who cancelled did so because they hadn’t made a claim, 14% didn’t see the value in their coverage, and a portion lacked clarity on why they cancelled (12%) or the purpose of their insurance product (5%).
This indicates a significant gap in awareness and understanding of insurance benefits, especially considering that less than half (49%) of workers are aware of the additional non-claim benefits that many policies offer.
Steve Bryan, director of distribution and marketing at The Exeter, expressed concern over these findings, stating: “The increase in the number of people who state they have cancelled insurance products due to financial pressures is disheartening but not surprising in the current economic climate.
“More concerning are the number of people who state they have cancelled a policy because they did not see value in the product they had purchased – including those who had not claimed. This highlights the valuable role that advisers play when recommending cover to clients. It also underlines the need for insurers, advisers, and policyholders to build ongoing relationships throughout the life of a policy.
“Frequent adviser reviews of a client’s needs and regular engagement from insurers are key to ensuring that cover remains fit for purpose and that policyholders are fully aware of the benefits offered within their policies.”
