Life protection product sales rise as more put money aside for a rainy day

SALES of life protection products have risen by as much as 20% in the first three months of this year as the recession encourages people to put money aside for a rainy day.

The figures come from the independent Irish financial services broker network Citadel Financial Advice and relate solely to serious illness insurance.

New business levels in the rest of the life insurancesector dropped by nearly 29% in the first quarter of the year, on a year-on-year basis. According to Citadel, the reasoning behind demand for serious illness cover bucking the trend surrounds consumer habits in recessionary times.

The company said people tend to become more financially conservative in a recession – ensuring they are protected by putting money aside for a rainy day.

According to Paul Sutton of Citadel: “We have found that the level of cover being chosen by consumers has risen considerably over the past few years. Coverage levels are now up to an average of over €300,000 from the more typical level of €50,000 or €100,000 ten years ago.”

He said cover stands at almost 10 times average income, driven by a number of factors: lower rates, increased affordability and improved point of sale advice.

“On average, consumers typically spend €65 per month on income protection cover or on life cover to simply insure their mortgage. Serious illness is also considered, but only about 20% of applicants choose this option,” he added.

Away from the life market, last week’s latest CSO inflation figures showed general insurance costs have risen by just under 19% in the last 12 months, with house insurance costs up by 25%.

“There’s no real way of forecasting how costs will change as premium levels are dependent on claim costs,” according to Michael Horan, non-life manager at the Irish Insurance Federation. “But, while an area like motor claim costs have risen by 24% in the last year; they’re still 33% lower now than they were in 2002,” he added.