I spent a hot July day discussing protection. It’s NOT what you think.

Iona Bain

The Young Money Blog has had an exceptionally busy summer, I’m pleased to report, with our calendar proving as red-hot as the weather.

I’ll be doing a little summer nostalgia trip ala Danny and Sandy from Grease over the coming days and weeks because firstly, mums and dads appear to run the media so when the school holidays start, the news agenda grinds to a halt, bar burkha-bashing Boris and a man being arrested for taking a micro-pig for a walk. So there isn’t a whole heap of new Young Money developments to cover (but there are some…watch this space).

But also: #smugmode. The Young Money Mission has achieved and taken part in some very cool stuff recently. Stuff we want to share with you. And it isn’t all one-way traffic – you’ll defo learn a few things along the way.

One of the many bodies that wanted a slice of sweet Young Money action was Protection Review.

Before you ask, this was *not* Britain’s annual condoms convention. Although judging by Durex’s recent boo-boo, the industry could do with a bit of, erm, probing.

No no. I was talking about protection. Y’know, the insurance kind.

You pay in while you work. You get a pay-out when you can’t. Sounds good…but you’ve probably never heard of it, right?

Don’t worry, I’m not adding to the millennial guilt pile that seems to grow by the hour (I’m not recycling! I’m not woke enough! I will never have a “small square” of dark chocolate as my one food luxury as long as I live!)

The falling rate of young pregnancy in recent times tells us that sexual health campaigners have done an excellent job of advertising the risks of unprotected sex.

Those campaigners have successfully helped our generation understand the need to look after our sexual health and take the necessary precautions to prevent unwanted pregnancies and STIs.

But most young people don’t know what financial protection is. Unlike sexual health, it’s not automatically on the curriculum and we don’t talk about it with our parents or mates. We never see it mentioned on Love Island (but then, I’m not sure what on earth these Barbies and Kens are talking about most of the time).

But to use Love Island vocab, the financial industry shouldn’t mug us off about this. Insurers have been ropey AF in telling young people why they need financial protection. Here are some pretty good reasons to have some protection in your back pocket.

Saving money, workplace safety nets, state benefits…none will give you the sustained income you need. Income protection is the only option will replace your earnings for a lot longer, if need be. Besides, do you want to be raiding your carefully-built kitty because you can’t work? Not great.

Protection is cheap when you’re young – around a few quid a week. Basically, the cost of a coffee, or a yoga-with-dogs class, or a dubious bronzing kit that will make you look you’ve done 15 rounds in Tough Mudder. In other words, protection is something most of us can afford, if only our head was in the right place.

To paraphrase those M&S food porn ads, this isn’t just an insurance product. (Increasingly) this is an insurance product offering loads of benefits in the here and now, like discounts for products and services based on healthy living tracked through our Fitbit. So you could get cheaper cinema and plane tickets (for example) just by having a walking desk or packing in the pizza.

Ill health can happen to anyone and everyone. It doesn’t discriminate by age. And you’d be surprised at the most common reasons for claiming income protection – essentially back pain and depression. So if you can’t work anymore, suddenly that little decision to take out insurance today could become the best decision you ever made tomorrow (or next year…or next decade…or never, but I think it’s a price worth paying for ultimate peace of mind).

Pictured At Protection Review 2018 (left to right): Rob May of Risk Assured, Andy Watts of Liss EXL, 
Poonam Bansal of Vitality, Simoney Kyriakou of FTAdviser…and yours truly

So you’re thinking: “blimey, those are some pretty sound reasons for buying protection but where do I begin?” A good online broker should figure out the right policy for you and take it from there. But I would really advise that you read up on what you want from your policy, as all those juicy extras I mention don’t necessarily come as standard.

This is where I would like to say “why not talk to a lovely financial adviser who will give you very affordable pointers, put no pressure on you to buy or overwhelm you with reams of paper?” And by all means, any advisers who fit this category are strongly encouraged to get in touch with Young Money Blog and I’ll hook y’all up.

Sadly, most advisers don’t have the business models (or frankly the altruistic tendencies) to give young people the affordable yet detailed face-to-face advice they need. Woe betide them because I find myself asking (particularly when I come across one or two of the more stubborn, millennial-bashing gammony ones)…how the hell is your business going to survive when all your babyboomers are six feet under?

As with so many aspects of the financial world, the protection market is not working hard enough for younger consumers. It’s getting a lot better, don’t get me wrong. But it’s not in our space and it’s not in our face. It’s not using the language we use, it’s not dealing with the goals and dreams that matter to us and above all, it’s not listening to us enough.

Too often, protection is still seen as a product, and a pretty fiddly ‘n’ tricksy one at that. It should’t be. It’s wrong to generalise but young people aren’t necessarily motivated by products.

I think many gen Yers and gen Zeders are becoming more critical of materialism and social standing as routes to contentment. With much more fluid paths through the jobs market, many of us are ditching the traditional markers of prosperity in favour of much more personalised, idiosyncratic goals. Yes, loads of us still want to get on the housing ladder but we’re trying to be more relaxed about it (bloody hell, we have to be) and see the positives in our situation.

So…let’s work with that, eh? Supporting our financial resilience isn’t just about underwriting mortgage payments. It’s about creating a narrative that inspires us to make plans for the future (going self-employed, travelling, establishing micro breweries with absurd names) safe in the knowledge we’ve got the basics covered.

Which brings me onto our next point. The value of protection needs to be demonstrated in both schools and workplaces, putting it firmly on level pegging with safety-net savings. Just as I don’t believe millennials should be shovelling all their spare cash into a pension they don’t understand before they’ve got their debts cleared, I think it’s misguided to treat buying protection as some weird little optional after-thought, on a par with wondering whether to buy a Cactus or start following Timmy Mallett on Twitter (the answer to both questions is yes, obvs).

And maybe there needs to be a concerted, collective movement within the insurance industry to pressure the new “Money Advice/Guidance/Help/whatever the hell it’s called” service to place protection on a par with basic saving. You won’t hear me saying this every day of the week but it could learn a thing or two from pension lobbyists, which have put their products at the heart of public discussion on long-term saving and investing (for better or worse).

The consistent message from the protection industry needs to be: “Do you prioritise self-care? You’ve come to the right place…”

The likes of Vitality have wisely majored more on the here and now, and in the process redefined what insurance should be (less the main show, more like a cherry on top). By providing incentives to be healthy, insurers can tap into a surprisingly responsible and careful mentality among younger people today – research increasingly shows our distaste for smoking, excessive alcohol consumption and so on.

The industry also has to be disruptive without being intrusive. Think of all those apps with all that data held on young consumers, shamelessly used to badger us into using their services with automatic notifications set to every half hour. Partnerships through open banking could offer a channel into our phones, the right kind of nudges that get us thinking about improving our financial resilience.

And it goes without saying that we need to make policies as simple as possible. James Daley from Fairer Finance pointed out at this year’s Protection Review that policy documents were often longer than novels like Animal Farm and Of Mice and Men. WTF?

Of course, any simplification runs the risk of diluting important terms that need to be fully grasped, particularly to prevent consumers being deprived of payouts simply because they misunderstood the small print. But this isn’t beyond our mettle.

Running through all this like a stick of rock is the self-evident need to have more young people in the industry. The more young representation we have in financial services, the more we can ALL benefit from a rich variation of opinion, backgrounds and insights.

As I explained in a previous blog, the age of deference is over. Our generation does not routinely trust older people who try to sell us something or tell us something. There has to be subtle shift where we treat our consumers as our equals, albeit lacking much of the knowledge we’ve been paid to acquire and have a duty to pass on.

So let’s aim to make protection as well-trusted and habitually used as Durex – dodgy batches excepted 

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