UK workers' demand for income protection triples between their 20s and 50s, yet fewer than a quarter of employers offer the benefit, new employee benefits data from Gallagher has revealed.
The analysis, drawn from selections made by approximately 65,000 employees at 25 companies, points to a broader pattern of workforce preferences shifting from lifestyle-focused offerings in early career stages to protection and health-oriented products in later life.
The employer-level shortfall echoes broader structural findings. The Financial Conduct Authority (FCA), in interim findings from its ongoing competition review, found that 58% of UK adults do not hold a pure protection product, citing low consumer awareness, misunderstandings about how policies work and affordability concerns. A final report is due in the third quarter of 2026.
Research from Oxford University's Smith School has previously identified personal experience of income gaps as a bigger driver of demand than financial literacy, suggesting many workers do not consider the risk until it is too late.
The Smith School's Income Protection Gap project proposed that insurers develop basic products for auto-enrolment and that employers build contribution-based income protection into employment contracts, mirroring the pension model.
Consumer group Which? has also noted that Statutory Sick Pay, at £116.75 per week for a maximum of 28 weeks, may foster a false sense of security among employees who assume their employer will cover extended absences.
Trend data suggests the gap is narrowing at the individual level but not in the workplace. ABI figures showed new individual income protection policy sales reached a record 247,000 in 2023, up 16% on the previous year.
Combined group and individual protection claims then hit a record £8 billion in 2024, data published last year by the ABI and industry body GRiD revealed.
Read more: UK insurers lead on employee benefits
Yet Gallagher's data indicates employer provision has not kept pace. Employee personal accident insurance featured in the top 10 selected employee benefits across all age groups but is offered by just 12% of employers on the platform.
Employees in their 20s favoured lifestyle-led offerings such as travel insurance and holiday trading. From age 30, priorities shifted, with critical illness selections rising to 19.30%. By their 40s, protection products took precedence, with critical illness at 22.32% and private medical insurance at 18.82%.
Holiday trading emerged as the most selected employee benefit across every age group, ranging from 18.88% among those in their 20s to 23.94% among workers aged 50–59.
Alistair Dornan (pictured above), managing director of UK benefits at Gallagher's Benefits & HR Consulting Division, urged employers to use data to close the gap.
"Early career employees often place greater value on lifestyle-led employee benefits such as holiday trading or gym membership. As responsibilities grow, protection benefits become increasingly important," he said.
