Protection with benefits

Damian Fantato

Deputy editor of
Financial Adviser

Protection providers are wooing Generation X customers with added benefits, but is it working, asks Damian Fantato?

They may not have access to avocados on tap like millennials or the wealth of the Baby Boomers, but if there’s one thing Generation X does have, it’s responsibilities.

This is a generation of people born between the mid-1960s and the early-1980s which has become squeezed between those above and below them.

In fact this generation is weighed down by its caring responsibilities for the cohorts above and below it.

This makes financial commitments, like protection, a tough ask for advisers. But that does not mean to say there is nothing that can be done for this generation.

One thing that protection providers are increasingly doing is offering added-extras and benefits to supplement the protection itself to offer as much value for their cover as possible – these can range from cinema tickets to medical services.

Emma Thomson, product strategist at British Friendly, says: “For Generation X consumers who recognise the need for cover but who may have limited budgets, these added extras can be very valuable, helping them save money and access important benefits.

“Many have either reached or are nearly at the point of taking out a mortgage, increasing rental expenditure and/or having families, so they need insurance but it’s typically a reluctant purchase.”

Part and parcel

A recent poll by Protection Review found 60 per cent of people in the insurance industry felt added-value benefits would eventually come to be seen as part of the core product, rather than just an add-on.

Only a quarter of people felt this would not be the case.

Shelley Read, senior business development manager at Royal London, notes: “Generation X customers want three things: transparency, value for money and simplicity.

“Rather than a series of added benefits which may come with a monthly cost, this audience are attracted to life products which include free benefits that need no qualification.

“By having an added benefit available from day one, insurance companies can add strong value to the products on offer.”

Generation X are often known as the 'sandwich generation' because they are sandwiched in between Baby Boomer parents and millennial children. — Rob Harvey, Drewberry

Perhaps one of the most well-known examples of a protection provider which offers added extras or benefits as part of its cover is Vitality, which encourages its clients to stay healthy with the incentive of rewards from Starbucks, Amazon and British Airways, as well as the prospect of a free Apple Watch.

But Deepak Jobanputra, deputy chief executive of VitalityLife, explains: “The rewards in the programme are not a simple add-on benefit, they are part of an incentive programme designed to help people lead healthier lives and bring our shared-value philosophy to life: improving outcomes for people’s health, for society and for us.”

He says Vitality’s research shows participants in the programme with the Apple Watch did the equivalent of 4.8 extra days of activity a month, compared to those who did not participate.

Mr Jobanputra adds: “For Generation X, who might be juggling work and family, facing pressure of higher costs of raising children at the same time as looking after their ageing parents, an ability to get more value from their insurance, while benefitting from comprehensive cover, is invaluable.”

Burden of care

But Vitality is far from alone in offering these benefits, with other providers such as Royal London, British Friendly and Aviva also providing these add-ons.

And despite the eye-catching nature of benefits such as a free Apple Watch or a coffee from Starbucks, Rob Harvey, head of protection advice at Drewberry, says providers can add real value with more meaningful services.

He suggests: “Generation X are often known as the 'sandwich generation' because they are sandwiched in between Baby Boomer parents and millennial children. As their parents are living longer, there is an increasing burden of care placed on Generation X to look after not just dependent children but also potentially dependent elderly parents.

“While lifestyle perks such as high street discounts and other similar benefits are always an appreciated 'nice to have', in reality it is more tangible additional benefits that come with such policies that are likely to be more useful for this generation.”

He points out this could include counselling services, carer support services, second medical opinions and children's critical illness cover.

The products are there but the industry needs to market more accurately to those needs. — Tom Baigrie, Lifesearch

Mr Harvey adds: “Without the additional benefits, there isn't always a great deal to distinguish one policy from another.

“However, it is the additional services that come on top of the policy that really make each individual product stand out and be truly beneficial to a policyholder's everyday life over and above providing the financial security these protection products were designed for.”

Same needs

But ultimately, as Ms Thomson says, none of these added benefits should distract from the protection itself - with what happens in the case of death or disability being the most important consideration.

So perhaps the most crucial thing is to not let the tail of these benefits wag the protection dog.

Tom Baigrie, chief executive of Lifesearch, says the biggest thing protection providers could do might be to simply market their products better.

He explains: “Generation X's protection needs are fundamentally the same as the rest of us. They too need low cost protection against the loss of their income through disability and those who have already acquired dependents need life cover, be it older relatives or their own children.

“The few who have money spare after that could add critical illness cover too.

“The products are there but the industry needs to market more accurately to those needs, raising the profile of income protection - which few consumers have even heard of in our experience - and getting the disinterested many to focus on being financially responsible.”

But responsibility, for the squeezed generation, is not necessarily in short supply - and that might be part of the problem.

Damian Fantato is deputy editor of Financial Adviser

Published 04/03/2019


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