Financial Vulnerability & The Need For Better Employee Support

COVID Pandemic Leaves More Than Half Of UK Adults Financially Vulnerable - FCA.

The damaging effects of the COVID-19 pandemic have pushed millions of people in the UK into financially vulnerable situations. That’s one of the main findings of new research by the Financial Conduct Authority (FCA).

According to the FCA’s Financial Lives Survey, which benchmarks the nation's financial resilience, more than half (52%) of UK adults -- equivalent to 27.7 million people -- are in some sense considered vulnerable. As a result, these individuals are at greater risk of harm because of low financial resilience and negative life events. This figure is up from 24 million prior to the pandemic.

Specifically, more than 25% (14.2 million) are considered as having ‘low financial resilience', which means they have too much debt or have low levels of savings or low or erratic earnings.

“Since the start of the pandemic, the number of people experiencing low financial resilience or negative life events has grown,” said Nisha Arora, director of consumer and retail policy at the FCA, in a press release.

“The pain is not being shared equally with a higher than average proportion of younger and (racial minority) adults becoming vulnerable since March,” she noted.

Pandemic drives employee demand for protection

Meanwhile, a survey from life insurer AIG Life has found the COVID-19 pandemic is driving demand for protection insurance from employees.

Indeed, over a third (37%) of the 986 employees surveyed by the insurer indicated a desire for greater protection insurance, such as life insurance, income protection and critical illness, from their employer.

Meanwhile, 30% of respondents said the pandemic has spurred them into finding out more about what protection their employers offer. This finding suggests (rather worryingly) that many employees did not know much about their employer’s staff benefit offerings prior to the onset of the pandemic.

Furthermore, over half of respondents (55%) said they are looking towards their employer for coverage as they believe buying individual cover themselves would be too expensive.

In terms of which employee groups are trying to discover more about benefits offerings, those under the age of 25 were most interested in finding out, with 61% in this age group planning to find out more information about what is already available and 58% saying they desire greater protection insurance from employers.

Lee Lovett, managing director, group protection at AIG Life, said: "The coronavirus crisis has brought into sharp focus for millions of us the need to have a financial safety net in case illness prevents us from working or, in the worst case scenario, where coronavirus leads to the death of a breadwinner.

"It is a concern that so many people believe individual protection insurance is too expensive for them. That is not the case and we would urge them to use online services such as The Money Advice Service or speak to a financial adviser to find out what is available."

Employee Benefits & Group Risk

What Group Risk products feature in your employee benefits offering? Are your employees fully aware of what benefits are available to them? Effectively communicating employee benefits is one of the keys to boosting adoption and ensuring your offering is a success. Contact Premier Choice today for further assistance or a completely impartial, no obligation chat.

Author: Matthew Bucknall - Group Risk and Protection Consultant