Young adults who receive financial education are significantly more likely to buy protection insurance and to recognise its importance according to new research that adds weight to the Government’s decision to make financial literacy compulsory in schools from 2028.
A study by the OneFamily Group – parent company of life and critical illness provider Beagle Street – found a clear link between financial knowledge and the likelihood of purchasing life cover, income protection and critical illness policies among 18- to 40-year-olds.
Across all respondents, 30% of adults in this age bracket have life insurance. But among those who have had some form of financial education, this rises to 37%, compared with 27% of those without.
Similar increases were seen for income protection (up from 7% to 10%) and critical illness cover (from 7% to 9%) when respondents had received financial education.
The survey of 2,000 adults also shows that financially educated young adults attach far greater importance to protection products.
Some 84% of those with financial education consider life insurance important, versus 75% of those without.
DEMOGRAPHIC DIFFERENCES
The gap is even wider for income protection, viewed as important by 75% of the financially educated group compared with just 58% of those who have never received guidance. For critical illness cover, the figures were 81% and 69% respectively.
Only 36% of respondents said they had received any form of financial education, most commonly via online resources, followed by family and friends, universities and employers.
Just 18% said they encountered financial education at primary or secondary school, highlighting the gap the new curriculum aims to address.
However, the research identifies stark demographic differences. Men are far more likely than women to have received financial education (41% versus 32%), while homeowners report considerably higher rates of financial literacy than renters (44% compared with 30%. Londoners are almost twice as likely to have received financial education as those in Scotland.
The findings come shortly after ministers confirmed that financial literacy – including budgeting, mortgages, compound interest and money management – will become a mandatory part of the curriculum for all English schools from 2028.
ZERO FINANCIAL EDUCATION
Ryan Griffin, protection director at OneFamily, said: “There are some stark differences when it comes to financial education, with nearly three in five 18 – 40-year-olds having had no financial education at all.
“What is clear however is the important role it plays in helping both Gen Z and Millennials understand the importance of protection, with a surge in numbers understanding the importance of Critical Illness, Income Protection and Life Insurance following some form of financial education.”
MORE TO BE DONE
And he added: “This is an important foundation to build on, and indications show Gen Z understand the importance of protection better than previous generations. However, there is still more to be done to turn awareness and understanding into action.
“With the recent news that children will also learn financial literacy from 2028 at primary school, there is a real opportunity here for younger generations to learn about both money management and protecting their futures earlier. This is essential to help people build confidence, resilience and the ability to make informed choices.”
The study suggests the new curriculum could help narrow gaps in financial resilience and bolster uptake of essential protection products among future generations.
PROTECTION ADVICE GAP
Roy McLoughlin, Plan Money Consultant and Protection Distributor’s Group (PDG) board member, said: “This insight from OneFamily really shows the direct link between being financially educated and understanding the importance of protection insurance across Critical Illness, Income Protection and Life Insurance.
“Something I have been seeing myself when I host surgeries with employers and employees is a desire to have learnt about budgeting, insurance, and wider financial literacy issues from a younger age.”
DEMAND FOR LEARNING
And he added: “The question ‘why was I not taught this in school?’ is often asked. As the research highlights, there is a gap emerging around under protected generations because they have had no financial education.
“Hopefully however with the investment in financial education being planned, coupled with the demand for learning, we will see greater understanding and greater uptake of protection insurance over the coming years as well.”
