How does inflation typically affect the demand for protection products?

Inflation typically leads to a decrease in the purchasing power of money, meaning that consumers have less disposable income available for discretionary spending, including protection products like insurance. When prices rise, household budgets become tighter, and individuals may prioritize essential expenses over additional protection needs. As a consequence, the affordability of protection products diminishes, leading to a reduction in demand.

This phenomenon is particularly relevant for products that are not legally required, where consumers can choose to cut back on spending. Even if there is an awareness of the need for protection, the increased cost of living can cause consumers to allocate their resources differently. Therefore, in an inflationary environment, it’s common to see a decline in demand for insurance and other protection products as people focus on meeting their immediate financial needs.