More UK consumers are insuring household goods at the expense of securing their income in retirement, according to UK pensions and life insurance provider Aegon.
New research* by Aegon has shown that 98% of UK users of insurance buy cover relating to mobile phones, holidays and pets, but have not considered a retirement income protection product which provides a guaranteed minimum pension income. The research showed that nearly a quarter of people (24%) pay more than £1,080 per year on the above insurances, while at the same time leaving their pensions income at the mercy of stock market volatility, Aegon said.
The results indicated a lack of awareness among consumers that unit-linked guarantees provide a guaranteed pension income which cannot fall below a certain level, Aegon said.
The failure to use guaranteed products may be simply due to lack of awareness of their availability, according to Aegon, as 30% of those surveyed said their biggest concern in relation to their retirement planning was running out of money.
Half of those surveyed said they would consider an insurance product to protect their retirement income against stock market turbulence, which in recent times has had such an impact on the value of many people’s retirement funds.
However, only 1.8% of those surveyed had already insured themselves in this way.
Aegon currently provides a guaranteed pension income protection product “Income for Life”, which invests a customer’s pension in unit-linked guarantees, and, like a variable annuity, guarantees a minimum level of income up until age 75.
Income for Life can be taken as a joint life or a single life plan. For a customer investing their pension in a single life plan and taking income at age 60, the guaranteed minimum income is 5%.
*Source: Survey for Aegon by Opinion Matters / tickbox.net of 1,419 UK adults, published November 2009
