FCA urges life insurance industry to close UK protection gap as majority of adults lack vital cover
The Financial Conduct Authority has warned that millions of UK families remain unprotected, with 58 percent of adults holding no life, critical illness or income protection insurance despite high protection needs.
The Financial Conduct Authority has stepped up pressure on the insurance industry to tackle the persistent "protection gap" in the UK, warning that millions of families are dangerously underinsured. According to the FCA's Pure Protection Market Study, 58 percent of UK adults hold no protection product whatsoever, leaving them and their families financially vulnerable in the event of serious illness, injury or death.
The gap is even wider when you look at actual protection needs. The FCA found that 72 percent of identified protection needs remain unmet, leaving families exposed to financial hardship if a breadwinner loses income or dies. Income protection is particularly neglected, despite the fact that over 2.9 million people reported being long-term sick in the UK in late 2026.
Part of the problem is access and awareness. Over 80 percent of protection sales still go through intermediaries that many consumers never use, and low engagement means millions of families don't realise they need cover until it is too late.
The FCA has urged insurers and advisers to improve how protection products are marketed and made available to ordinary consumers. Writing a protection policy in trust at outset means the payout passes to beneficiaries outside the estate, free of inheritance tax, and can be paid within weeks rather than months of waiting for probate.
Based on reporting by FCA (2026). Information only, not advice.
Information only. This is general information, not financial, tax or legal advice, and not a personal recommendation. Tax rules depend on your individual circumstances and can change. Please speak to a qualified, FCA-regulated adviser or a solicitor before acting.