Young people ignoring insurance as unemployment risk grows

Wednesday, 25 February 2009 09:21

Young people are failing to purchase financial protection products, leaving them financially vulnerable and subject to higher costs when they finally decide to purchase protection.

Only three per cent of all protection policies written by life insurance and protection specialist LifeSearch during 2008 were bought by younger adults.

Matt Morris, LifeSearch policy adviser, said: "Clearly more effort needs to be made to reach younger people.

"Many younger people have debts, mortgages and families that need financial protection in the event of the main income provider being unable to work."

Iain Mallon director of Protection Marketing of AXA also noticed that younger people are putting off buying financial protection insurance.

"The average age of first-time buyers is 34. It's getting older," he said.

And as major financial responsibility is delayed, so is taking up protection insurance, even though it may still be useful.

Unfortunately, the current economic crisis is hitting younger people particularly hard, meaning many may not soon be in a position where they can afford to buy insurance.

According to recent reports released by the Office for National Statistics, of the 146,000 newly unemployed in the three months leading up to December 2008, 38,000, or 26 per cent, were between 18 and 24 years old.

That percentage is down from the previous three month period when 40 per cent of those who became unemployed were in the 18 to 24 age group.

Those who can afford financial protection insurance should consider buying now, as it will save them money down the road.

Mr Mallon pointed out that a person purchasing financial protection cover at 28 instead of 38 could save as much as £16,000 over 25 years.

"The younger you buy the more affordable it is," he said.

Johanna King

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