L&G report: IP a luxury for the well-off?

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People would have to be "quite affluent" to pay for individual protection in this tough economic climate, a senior MP has said.

The claim came from David Willetts MP, Minister of State at the Department of Business, Innovation and Skills, who was speaking at today's launch of Legal and General's 35 cubed report.

The report asked if there could be an ISA-equivalent for protection. This would see individual protection supported by government in the same way tax-free savings and pension contributions are.

Willetts said: "By the time you have got two quite good products: auto-enrolment, with its crucial advantage of the employer and tax payer contribution on the side, and ISAs, which have a favourable tax regime and great flexibility, you would have to be quite affluent to be getting into a third financial product somewhere between insurance and savings."

He added that there are some people who would want to take out this type of insurance.

"But you need quite strong incentives and there is a legitimate collective insurance argument that some of those costs would genuinely be covered by the nation as a whole through government," he said.

The report found people aged 35 to 44 were not very confident about job security and have had more jobs than any other generation.

It also revealed more than 230,000 people aged 35 to 44 are out of work because of incapacity and in receipt of Employment and Support Allowance.

Steve Griffiths, strategy and propositions director at Legal & General, said the findings indicate individual protection could bridge gaps in financial support if people fall ill or are out of work.

He said: "We would obviously love for more people to protect themselves. We do a significant amount to try and engage people but is there help [from the government] that we can have in terms of encouraging people to protect themselves in the same way we are encouraging people to save through ISAs and now to save for their pensions through auto-enrolment."

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