Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Cost-of-Living Pressures Make Income Protection Harder to Afford

A recent survey by LSL Financial Services has highlighted a growing challenge for brokers, as rising household costs make income protection more important for clients but increasingly difficult to afford. The findings were presented at the inaugural LSL Protection Forum.

According to the survey, 86% of brokers said income protection was becoming more necessary for clients. This was seen as the most important type of cover, with only 7% of brokers naming critical illness cover and 5% selecting life-only term assurance as priorities.

Two-thirds of brokers reported that the cost of living was having the biggest impact on people’s financial confidence, ranking above concerns about mortgage rates and borrowing costs, which were cited by 15% of respondents. Despite recognising the need for income protection, brokers said that financial pressures were making it harder to place such cases. Price and affordability were identified as the main reasons customers declined protection, according to 64% of brokers.

When asked about changes in demand for protection products, 57% of brokers said there had been little change, while 8% reported a fall in demand. However, 35% of brokers observed a rise in demand, which LSL Financial Services described as an encouraging sign that more people are recognising the need to protect their income.

The survey findings indicate that brokers are operating in a challenging advice environment, where clients are aware of the need for protection but have limited financial flexibility to take out policies. LSL Financial Services noted that this situation points to a difficult environment for advice, with customers facing a paradox: a clearer need for protection, particularly income protection, but less room in their monthly budgets to act on it.

These trends are relevant for UK letting agents and inventory clerks, as tenants and landlords alike may be affected by the affordability of protection products, potentially impacting their ability to manage financial risks related to property and tenancy.