Pandemic Sees 60% of Brits Thinking More About Financial Stability

The COVID-19 pandemic affected not just the nation’s physical health. It also impacted the UK economy and consumers’ financial wellbeing.

Given this, it’s perhaps no surprise that 59.4% of respondents to Drewberry’s new Pandemic Health & Protection Survey 2021 said it had made them think about their financial stability.

In comparison, just 11% of adults disagreed with this statement.

Who is More Likely to Be Considering Their Financial Stability Due to COVID-19?

To break it down a little further, adding demographics into the equation sees an interesting view begin to emerge.

Men vs Women

For instance, women are more likely to be thinking more about their financial stability since the pandemic than men. 62.5% of women either agreed or strongly agreed this was so compared with 57.1% of men.

Yet despite this concern among women, the unemployment rate for women aged 16+ in the 3 months to December 2020, at 4.8%, is lower than the 5.4% rate for men.

Concerns Over Financial Stability by Age

Meanwhile, there’s a definite correlation between being younger and having concerns about financial stability.

Almost 7 in 10 (69.2%) adults aged 20-30 agreed or strongly agreed that the pandemic made them worry about their financial stability. A similar proportion (64.8%) of those aged 30-40 said the same.

Meanwhile, this was true for a smaller proportion of older respondents — less than half (47.8%) of adults aged 60-65 felt this way.

This may be because older adults are more likely to have accumulated a financial buffer in terms of savings, pensions and property. They may therefore have fewer concerns in this area as a result.

Have Concerns About Financial Stability Changed Consumer Habits?

Yes and no.

Firstly, 56.3% of respondents agreed or strongly agreed that the pandemic had made them more likely to save money.

Indeed, many adults have put this into practise already. 62.6% of respondents agreed or strongly agreed with the idea that they’ve been able to save more since the outbreak of COVID-19.

With furlough and home working causing a reduction in costs such as commuting to work, this could be why it’s been easier to save.

The main reasons consumers are saving more now are:

• To have a safety net for a rainy day (58.6%)
• In case they lose their job (24.8%)
• For home renovations (24.3%)
• To buy a home (24.3%).

Are Brits Taking Out Financial Protection?

Clearly, UK adults have financial stability concerns. That’s probably the reason they’re more likely to save now than before the pandemic.

At the start of the pandemic we saw a rush of people looking to take out cover but will this heightened awareness continue beyond the pandemic. Policies such as Income Protection, Critical Illness Cover and Life Insurance can all be an invaluable source of financial stability for consumers and their families.

• 14.4% of adults agreed or strongly agreed that they were more likely to buy Income Protection
• 15.4% of adults agreed or strongly agreed that they were more likely to buy Critical Illness Cover
• 17.5% of adults agreed or strongly agreed that they were more likely to buy Life Insurance.

Although these are positive figures we still found more people bought Pet Insurance (16%) than Life Insurance (10%), Critical Illness Cover (4%) or Income Protection (1%).

What About Younger Adults?

Given that we know younger adults are the most concerned about their financial stability, are they more likely to purchase protection than their older peers?

Well, that’s more encouraging.

Income Protection

Nearly 7 in 10 respondents aged 20-30 agreed or strongly agreed that they were more likely to buy Income Protection now than pre-pandemic. A further 64.8% of those aged 30-40 said the same.

Critical Illness Cover

1 in 5 (19.3%) of respondents aged 20-30 agreed or strongly agreed that they were more likely to buy it now than before COVID-19 struck. Only slightly more (19.5%) of respondents aged 30-40 said the same.

Life Insurance

Meanwhile, for Life Insurance, it was slightly more positive the younger adults were. For example, 26.9% of respondents aged 20-30 are more likely to consider Life Insurance today than before the pandemic.

A further 20.2% of adults aged 30-40 agreed or strongly agreed with this statement. However, once again, the older adults become the less likely it is the coronavirus has swayed them to buy protection.

Summing Up: What Has the Pandemic Meant for Consumers’ Financial Health?

In brief, coronavirus has meant UK adults are more likely to want to save. They’ve also been able to save more, with around 3 in 5 adults putting cash aside for a rainy day.

This is a good thing. Everyone needs a safety net or a contingency plan in case something goes wrong. Having that buffer should help improve overall financial stability.

Although we saw a positive response particularly among younger adults there is still some work to do to alleviate concerns which may prevent UK adults from putting adequate financial protection in place.

With a significant proportion of respondents thinking protection insurance was more expensive as a result of the pandemic and a belief insurers don’t pay out we need to do more to make Brits aware of the positive impact our industry has.

Out of the 10,205 individual life claims made, 96% were paid out (totalling £128 million), and pay out rates remained high for group policies too, with 99% of 993 claims being paid (£73 million).