15 minute read 14 Dec 2020
Child diving off a diving board

How the COVID-19 pandemic raised interest in life cover

By Clive Allison

Director, Life & Pensions, Financial Services, Ernst & Young LLP

Passionate about building trust in the protection market through consumer engagement. Brings industry-based experience to help clients grow. Designs and delivers consumer centric solutions.

15 minute read 14 Dec 2020

To support growing consumer needs, protection insurers must focus on trust, products and distribution.

The COVID-19 pandemic represents a ‘good news, bad news’ scenario for life insurers, especially those that have struggled to find growth opportunities. On the one hand, it’s a generational opportunity for insurers to demonstrate their relevance and value to consumers. As recent EY research confirms, consumers have gained a new appreciation and clearer understanding of the need for the financial protection provided by life insurance. The pandemic has clearly increased demand for digital life insurance, opening significant growth and innovation opportunities for insurers, thanks to technology advancements and the convergence between the life and health sectors.

However, the pandemic also highlighted longstanding challenges. Consumers don’t think of insurance first (or even second or third) when they think about financial wellbeing, according to our research. Life insurers must overcome this consideration gap if they are to seize the current growth opportunity by engaging new consumers and strengthening relationships with existing customers. The study results also raises significant concerns about product complexity, digital capabilities, distribution networks, and consumer trust in the industry.

Our recent survey results indicate where and how insurers should focus their efforts and investments if they are to meet the moment and deliver the protection and peace of mind that individuals, families and society as a whole are looking for. They can also seize the opportunity to build stronger (and more successful) customer relationships by clarifying the value of their offerings and how they contribute to financial wellbeing – not just in response to a crisis, but also across a lifetime. The findings also suggest which technologies can have the greatest impact – both in terms of meeting rapidly changing consumer needs and enabling insurers to transform to become truly tech-led, analytics-enabled and digital-first in their strategies and operations.

  • About the survey

    EY Seren conducted an online survey of 1,000 UK consumers, a nationally representative sample, in July 2020. The objective was to gather insights on whether COVID-19 has affected or changed consumer perceptions of protection. Prior to launching the online survey, EY Seren conducted 10 in-depth interviews with individual consumers. The insight captured in the interviews was used to refine the survey questions and themes.

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The COVID-19 pandemic has consumers thinking about what matters – families, friends and financial wellbeing.

Insurers that can come up with new types of offerings, including services that promote financial wellbeing, will be well positioned.

It’s not surprising, given the pandemic’s economic fallout, that 55% of all consumers agree that COVID-19 has made them re-evaluate how they can protect their future and financial wellbeing. Of that 55%, almost half (48%) agree they have taken action (e.g., buying additional products, raising their contribution to saving plans, or increasing coverage). Among all respondents, 25% agree that the pandemic has affected their attitude towards protection, with 58% of those feeling more positive towards life coverage products. 

UK protection consumer research


Of all consumers agree that COVID-19 has made them re-evaluate what they need to do to protect their future and financial wellbeing.

What survey participants said:

You never know what could happen to change your health circumstances. So, I arranged life insurance, so that my family would have no worries if I were to pass away.

Implications for insurers

Although 25% doesn’t sound like a large number it’s enough to disrupt.  With more consumers thinking about financial protection, insurers have an opportunity to engage with consumers and facilitate conversations on protection and financial wellbeing. Specifically, they should better clarify their role in providing protection and facilitating broader financial wellbeing.

There is a critical distinction between the attitudes of policyholders and non-policyholders – or those with protection versus those without. The former feel protection is important – with 71% agreeing that they need it; among the latter cohort, only 13% feel they need it. (For more details, see key finding 4.) In other words, those who have life insurance consider it essential; those who don’t largely view it as a luxury.

Of course, people need more than insurance to protect themselves and their families. That’s why insurers must find new ways to become an essential part of consumers’ lives. Consider how digital tools and experiences can help prompt good financial decision making and provide answers to questions about specific goals. Insurers should also explore how wearable technology can help them promote healthier behaviours among policyholders, perhaps in exchange for premium discounts. Such engaging experiences can help insurers demonstrate increased value to consumers, even as they benefit from increased loyalty. 

As the economic effects of the pandemic linger, more people will be re-evaluating their own ‘new normal’ and taking action accordingly. For existing customers, insurers need to understand and deliver the other protection that they are considering. For non-customers, insurers must figure out how to capture their attention and shift their mindset. Those that can move quickly to market with new types of offerings, including ancillary services that promote financial wellbeing, will be best positioned to seize the upside.  

UK protection consumer research


Of all consumers say that COVID-19 has affected their attitude towards life cover products

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Consumers are only somewhat confident about buying insurance and turn to advisors for specific reasons.

Products must be simpler, so they are easier to understand, and with more flexible pricing.

Despite the uncertainty of the times, 58% of survey respondents agree that they feel happy they have the right support in place to protect their future or financial wellbeing. Typically, this means relying on friends and family members for guidance on financial products. This finding confirms other industry research about ‘money tribes’ and the human tendency to rely on trusted sources of information when making complex or sensitive decisions. In the wake of COVID-19, research has shown that consumers trust advice from friends and family more than they trust that from professional advisors and credentialed ‘experts.’ While such behaviour may seem irrational to industry insiders, it makes sense from the point of evolutionary psychology and behavioural finance. 

Life insurance presents unique challenges, however; 40% of survey respondents agree that thinking about life cover and planning for the future is scary, while 34% agree that life cover is confusing, and they feel lost or don’t know where to start. A similar proportion (33%) believe that they would need to work with a financial adviser to select the right life cover for them. 

Of the 46% of survey respondents who have life cover or critical illness or income protection, 40% used advisors, representing 18% of the overall population. For this group, the top 3 reasons for working with a financial adviser are:

  • I wanted someone to show me my options as I didn’t fully understand them (40%)
  • I felt more secure making difficult financial decisions using a financial adviser (39%)
  • I wanted to minimise the time and effort I needed to put in (32%).

In contrast, among consumers who self-serve, the top three reasons for not working with a financial adviser are:

  • My situation isn’t complicated, so I thought I could do it myself (54%)
  • I could not see the value in paying for their advice (35%)
  • I thought they would be too expensive (21%)

UK protection consumer research

55 %

Of all consumers agree that COVID-19 has made them re-evaluate what they need to do to protect their future and financial wellbeing.

UK protection consumer research


Of all consumers agree that life cover is confusing, and they wouldn’t know where to start.

What survey participants said:

I have had insurance products in the past and have not been impressed by the return or by how much commission the agent makes.

Implications for insurers

It’s clear that insurers must solve a few overlapping challenges if they are to take advantage of the uptick in consumer interest in their products. Products must be made simpler, so they are easier for customers to understand and easier to sell through digital channels. They must also feature more flexible pricing so individual consumers can find affordable coverage.

With little or no face-to-face interaction, insurers must find ways to inform and empower consumers to take action via intuitive and seamless digital self-service channels. Hybrid distribution models will make human advisors available if and when consumers need one. Beyond digital and traditional channels, they must find other ways to make their products available. For instance, they could consider partnerships with adjacent sectors, including health insurance, wellness companies and even certain types of retail, that have more access to consumers as the pandemic lingers.

Additionally, insurers must find ways to break into ‘money tribes’ so they’re not filtered out by informal advisors or networks of friends and families. New thinking and fresh approaches are necessary for insurers to build trust and gain entry into these tribes. Clear articulations of the value and purpose of specific types of products is a good place to start. Rather than emphasising the risk of leaving one’s family destitute or touting strong records of claims payments, insurers could focus on the friends and families that give informal advice via highly targeted messages to niche audiences on social media. The goal is to find resonant messages distributed by trusted influencers. Insurers could also look to link products to changing customer needs and specific life events, as well as provide planning tools, practical tips and financial education.  

Boy jumping off the rock into the water
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Consumers aren’t focused on insurance and don’t equate it with financial wellbeing.

Insurers must help consumers learn how their products support a range of financial goals

Our survey results confirm that consumers thinking about financial wellbeing in light of COVID-19 don't think of insurance first. When consumers were asked about the top three ways they protect their financial wellbeing, insurance was near the bottom of the list:

  • Savings (77%)
  • Pensions (45%)
  • House value (30%)
  • Nothing formal; prefer to take things day-to-day (30%)
  • Access to credit (29%)
  • Investments (28%)
  • Support from parents or family (25%)
  • Life/health insurance (15%)
  • Other insurance (8%)

Among the 55% of respondents who have re-evaluated their situation due to COVID-19, a financial review has been the most common activity, cited by 68% of that group, or 37% of all survey respondents. But insurance doesn’t fare well with this group either. The reviews most commonly focus on:

  • Savings (51%)
  • Investments (21%)
  • Pensions (17%)
  • Life/health insurance (11%)
  • Mortgages (6%)
  • Other insurance (5%)

Among those who have bought additional products or increased their contribution or coverage, insurance is not a top choice: 

  • Savings (32%)
  • Investments (12%)
  • Life/health insurance (9%)
  • Pensions (6%)
  • Other insurance (3%)
  • Mortgages (1%)

UK protection consumer research


Of consumers said that they protect their financial wellbeing through savings

What survey participants said:

I have more than enough savings and investments to cover me.
I don't have enough spare cash to waste on any kind of insurance.

Implications for insurers

Growth will be extremely difficult to achieve from this lagging position. A large gap persists between what customers are looking for today and what insurers offer and how those offerings are perceived. Here again, insurers must refresh their market positioning to gain more mind share among consumers thinking about financial wellbeing.

Insurers must find ways to provide consumers with the right information at the right time and through the right channel or media. Enhanced communications will offer tailored, relevant and thoughtful messaging for each customer segment at every interaction along the customer journey (e.g., applications and acquisition, rejection letters, policy documents, claims).

It’s also important to identify the right digital entry points to the customer journey to reach both customers and non-customers with appropriate messages about financial protection in general and life insurance products in particular.  Financial education is critical. Insurers must help consumers learn how their products support a range of financial goals. For example, they can highlight how life policies can supplement retirement savings far beyond the proceeds from selling a home. Ideally, insurance will be known for enabling – not just protecting – financial wellbeing.

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Insurers have much work to do to demonstrate their value, purpose and trustworthiness – especially to non-policyholders.

To build trust, insurers must focus on brand, marketing, product development and sales.

The research clarifies how much work the industry has to do to get on the radars of and build trust with consumers. Again, the results include both good and bad news. On the positive front, 71% of existing customers agree they need life insurance protection. That equates to about one-third of the overall population, given that 46% of surveyed consumers have coverage for life, critical illness or income protection. 

The bad news is that consumers without insurance don’t see the value or need for it; of the 54% that don’t have protection, only 13% think they need it, equivalent to 7% of the overall population. Among those without insurance, the top three reasons for not holding protection are:

  • I don’t think I can afford it (31%)
  • I think it’s a waste of money/I don’t need it (30%)
  • I have other immediate priorities, such as meeting my day-to-day outgoings (23%)

There are significant concerns about the industry among all survey respondents, with 46% believing that insurers will attempt to find loopholes to escape payment of claims; another 29% believe that life coverage products aren’t aimed at people like them. Perhaps most troublingly, only 34% agree that most life insurers are honest and transparent in the way they treat customers.

For an industry that has long positioned itself as ‘being there’ when its customers are in need, these numbers would appear to be cause for serious concern. However, other research has shown that although consumers are sceptical towards the industry as a whole, they trust many individual brands. Indeed, large organisations that provide both life coverage and pension products are among the most trusted in the UK. The suggestion is that the industry needs to tell a more compelling story about the concept of insurance and why its offerings are particularly important now. 

What survey participants said:

It’s surprising to see how difficult it is to get any help and support from insurers.
You have to ensure that when you took out your policy that you didn’t tick the wrong boxes, as your insurer could easily refuse to pay out.

Implications for insurers

Individual insurers must recognise that lack of trust in protection is at minimum a barrier on their products as they seek to reach new consumers and increase wallet share with existing customers. As such they should seek market and consumer insight into where their brands stand today and what it will take to reposition or reinforce messaging. Figuring out how to use existing customer data to initiate conversations about financial wellbeing is a good first step. 

To overcome customer questions about value and affordability, insurers should design dynamic protection products that enable them to ‘kick the tyres’ and experiment. Ideally, consumers could modify features, personalise services and tweak coverages via online channels without the need for additional underwriting. If insurers can induce their customers and affinity partners to share more data, they can increase the level of personalisation and, ultimately, the overall value – they offer. 

To be clear, solving brand and trust challenges are not easy. It requires concerted and sustained effort in multiple dimensions, from brand strategy and marketing, to product development and sales. As a starting point, insurers should aim to expand their value propositions to include broader definitions of financial wellbeing. Ideally, consumers will associate life insurance with ‘quality of life,’ viewing it as a powerful tool for helping them achieve financial security and live the life they want to live. The shift in consumer perception must move from ‘insurance is a product for a term’ to ‘insurance is a service for life.’

Pivoting to growth in a time of uncertainty

The rising interest in life, critical illness and income protection policies caused by COVID-19 presents a clear upside for insurers. However, to take advantage, they will need to address a range of longstanding issues – from back-office automation and better digital distribution, to a more clearly articulated value proposition and more attractive products. The boldest and most forward-looking insurers will use the COVID-19 pandemic as a launching pad for new product offerings, new business models (including subscriptions and ecosystems) and other innovations. They are looking to enhance digital channels, personalise experiences and become more sophisticated in using APIs to connect and share data with partners.

New product classes (e.g., more flexible and affordable lifetime savings products) should focus on the reasons consumers don’t buy them. For example, they should be designed for simplicity, so consumers can find them online, understand the value they offer and purchase them via self-service channels.  Insurers should also find intelligent and timely ways to engage with existing customers (e.g., around key life events) to boost their cross-selling and up-selling efforts, even as they clarify why and how they are adding value for consumers. Executing against those objectives will require more sophisticated omni-channel communications and well-defined customer journeys. Certainly, insurers must develop strong hybrid channels so consumers can ask questions or seek guidance when they need it.

It’s also a moment for insurers to live their purpose – providing protection and peace of mind to individuals, families and communities. As such, they should not be shy in sharing stories from their long histories helping consumers and societies recover from great crises. Financial education – perhaps in collaboration with regulators and public authorities – can also help people feel more confident about meeting their financial and retirement goals. Insurers that can take these actions effectively in the coming months are likely to find that the path to success runs through an increased commitment to purpose. 


Insurers can seize the opportunity to build stronger and more successful customer relationships by clarifying the value of their offerings and how they contribute to financial wellbeing. To meet the rapidly changing consumer needs, insurers should look to the technology that will support them to become truly tech-led, analytics-enabled and digital-first in their strategies and operations. 

About this article

By Clive Allison

Director, Life & Pensions, Financial Services, Ernst & Young LLP

Passionate about building trust in the protection market through consumer engagement. Brings industry-based experience to help clients grow. Designs and delivers consumer centric solutions.