Largely due to the negative impact of UK’s economic environment, along with the tight squeeze on household budgets, consumers are choosing not to go in for payment protection insurance, to cover their outgoings.
The Association of British Insurers reported that, with the increase in the cost of living, nearly 70% of British people said that they were not keen on the idea of opting for the PPI or the payment protection insurance, which was meant to cover their insurance premiums, mortgage payments and other such outgoings.
Almost 90% of the Brits feel that their country’s economic condition is in an even worse state in comparison to the last year, the same time. And nearly 80% feel that the condition is only going to deteriorate in the next year. As companies are following stringent cost cutting plans, unemployment has increased and is on the rise.
But in spite of this negative outlook, and the fact that majority of the population said that they would not take it well, should they be made redundant tomorrow, they were not willing to consider taking out the payment protection insurance, which would actually prove beneficial to them in the event that they would become unemployed.
ABI’s assistant director of health and protection insurance, Nick Kirwan said that the fact that people were not even willing to look at the possibility of taking out protection insurance, even though this insurance would cover redundancy in any uncertain economic event, was indeed worrying,
He felt that they needed to work harder to reach to people and spread the message about the benefits and value that the appropriate protection insurance, an example of which is mortgage insurance, would give to both, individuals and families. He stated that he hoped that the consumer factsheet on protection insurance products, which was recently published, would attract consumers and motivate them to consider protecting their income and home, which are their most important financial assets.
While half of the respondents of the survey stated that they did have life insurance, around 39% stated that they do not have payment protection insurance, life insurance or MPPI – mortgage payment protection insurance.
Director of research and chief economist at ABI, Rebecca Driver, stated that given the current economic situation and the increase risk of unemployment, the need of the hour was for people to develop strategies that would serve as a protection in any eventuality.
City analyst Capital Economics feel, that many middle class workers are resorting to another job, in order to cope with the increase in cost of living. Police officers, lawyers, IT workers and business analysts are taking up other jobs so that they can make ends meet.
Popular jobs that middle class people are resorting to; include various types of jobs on the Internet, such as freelance work, designing websites, selling things on eBay et al. Many of them were also moonlighting as chauffeurs. The number of people taking up a second job has shown a five per cent increase, in comparison to recession periods in the past. Thus the total of around 1.15million is the number of disparate groups in the UK that are united by financial need.