Legal & General (L&G) backs the ABI for protection to have a greater role in reducing the state’s welfare burden
There has been a debate for many years that the public should take a greater responsibility for their own finances. Some may say that all the horror stories provided by UK insurers about the dangers of not buying income protection, critical illness or life insurance was just a ploy to increase sales.
Step back a minute and look at projects like Seven Families and it is clear to see how people with illnesses struggle to survive on state handouts.
Reductions in the cost of welfare will come from lessening reliance on the state. Helen White, head of protection at the ABI
John Pollock, chief executive officer, Legal & General Assurance Society, said: “We wholeheartedly agree that the UK needs an alternate source of funding for those who are unable to work due to sickness or injury.
“The current cost of welfare to the state is staggering, and ultimately unsustainable. Ensuring a greater number of families and individuals have adequate protection insurance is one way in which, as an industry, we can help to reduce this burden.”
Mr Pollock continued: “By implementing ‘auto-enrolment’ type systems for protection cover and long term care, we could help to ensure that thousands of people across the UK are getting the financial support they need should something happen to a key bill payer in their household.
“Compulsory cover is already in place in the motor insurance industry, and auto-enrolment for pensions has been a great success so far with around a 92% participation rate. We see no reason why this cannot be mirrored for protection products, helping both the state and individuals in the long run.”
It will be interesting to see if Seven Families increases public awareness of income protection and the benefits this type of insurance can provide individuals and families. Whether the government will make it compulsory for everyone to buy protection insurance is a whole other debate.