A recent study by The Exeter has unearthed a surprising trend among UK workers – a significant misjudgement of the actual costs of various insurance policies. Nearly half (44%) of the workforce in the UK are found to overestimate the monthly expenses associated with income protection, life cover, and cash plan policies. This misconception has profound implications on both the perception and utilization of these essential financial safety nets.
The study, which surveyed 2,000 UK workers, aimed to shed light on their financial and health concerns over the past year. It revealed that 37% of the respondents overestimate the costs of income protection and life cover policies, while a staggering 59% have a skewed perception of the cost of cash plan policies, which are, in fact, a more affordable insurance option.
The gap between perception and reality is evident in the figures. For income protection, the average estimated monthly cost was £35.20, significantly higher than the actual average of £24 for a two-year limited benefit term. Similarly, life cover was assumed to cost around £34.70 per month on average, overshooting the real average of £26. A notable 7% of the workers even believed that the cost would exceed £76 per month.
Cash plan policies also fall victim to these misconceptions, with the predicted monthly cost being £34.90, despite some plans starting from as little as £7. This disparity is not limited to these policies alone. The study also found that the cost of private health insurance is commonly underestimated, with workers expecting a monthly premium of £43.30, whereas the actual average is nearly double at £85.
This misjudgement extends beyond mere estimates, as a sense of uncertainty prevails among the workforce. About 19% of respondents were unsure about the cost of a private health insurance policy. Similarly, 20% were uncertain about income protection costs, 16% for life cover, and 32% for cash plans.
The Exeter’s findings highlight affordability as a critical factor in insurance decisions, with 40% of workers deeming it the most important consideration. However, the misperceptions about insurance costs seem to be deterring many from exploring available options, thereby impacting their financial resilience and access to private healthcare.
Steve Bryan, The Exeter’s Director of Distribution and Marketing, underscored the significance of these findings. He pointed out that despite the widespread awareness of protection and health insurance products, many UK workers are inadvertently missing out due to misconceptions about pricing. Bryan emphasized the industry’s collective responsibility to challenge these perceptions and ensure that more consumers view financial resilience and access to private healthcare as viable options.
The Workers Union Says…
“This study by The Exeter serves as a wake-up call for both the insurance industry and consumers. It underscores the need for increased awareness and education about the actual costs and benefits of insurance products, empowering workers to make informed decisions for their financial and health security.”