Why income protection insurance is essential – 5 things you should read
01 July 2022
01 July 2022
Income protection should arguably be the cornerstone of any financial planning. However, the recent Swiss Re Term and Health Watch 2022 highlighted that whilst there had been an 8.9% growth in income protection sales in 2021, the income protection market is still down from the record high of sales in 2019.
This is perhaps understandable given the Covid pandemic, but with the cost of living crisis squeezing household incomes and many individuals and families having to make tough decisions about what they spend their money on, there is a risk that income protection is seen by many as an unnecessary luxury, rather than arguably the most essential insurance anyone could have.
This year the Income Protection Task Force (IPTF) will once again be running their Income Protection Awareness Week (IPAW) from the 20-24th September, to highlight the importance of income protection and call on more advisers to discuss IP with their clients. Advisers play a crucial role in engaging with consumers on all protection products, but with income protection sales still lagging behind life and critical illness cover, it’s clearly essential to raise awareness of the value and need for IP for many of their clients. In this round-up, we bring you 5 insights highlighting the importance and benefit of income protection insurance.
WHY INCOME PROTECTION IS THE BEST SOLUTION FOR PROTECTING A CLIENT’S MENTAL HEALTH
Income protection insurance is arguably the only protection product that provides adequate protection against common mental health conditions and those that are likely to result in both short or long-term sickness absence. Income protection sales still lag behind life and critical illness cover though, meaning many clients do not have the best cover in place. In this insight we compared the differences in cover, with comments from medical experts on mental health conditions and also examined the other ways income protection plans provide excellent cover for clients protecting their mental wellbeing.
“I DON’T NEED INCOME PROTECTION, I GET SICK PAY”
“I don’t need protection insurance, I get sick pay from work”. As I’m sure many advisers can also attest to, this was an objection I encountered frequently during my time as a protection adviser. The reality of course is that many UK workers are not entitled to sick pay, or if they are, their sick pay provisions will be insufficient to meet all of their regular outgoings, particularly long-term. This is where income protection insurance is vital, as we explored in this insight.
THE STORIES BEHIND INCOME PROTECTION CLAIMS
There can be no better demonstration of the value and importance of protection insurance than real life claim stories, where we hear from the people who have unfortunately fallen ill and claimed on their policy and the impact that has had. In our claims hub we bring together numerous case study videos from across the industry, with our dedicated income protection including powerful stories from various insurers, as well as the 7Families campaign.
LV=’S 35 YEAR INCOME PROTECTION CLAIM… THAT IS STILL BEING PAID
When speaking to clients about protecting their income there are many objections that might be thrown at you. “I’m too young”, “I’m healthy”, “if I’m ill I won’t be off for a long time” might be some of the more common, especially in younger clients. Whilst statistically, a younger person is less likely to need a long period off work, it does happen and the story of one claim from LV= highlights exactly why younger clients should be prioritising Income Protection.
HOW HOLLOWAY FRIENDLY HELPED A CLIENT ACHIEVE THE BEST POSSIBLE OUTCOME
This real life claim story from Holloway Friendly not only highlights why income protection is so important, but also the fantastic ongoing support that they provide to their clients that many do not see or appreciate. This story is in fact not so much about a claim, but rather the support provided to a client in order to help them get back on their feet and return to work after 7 years.
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.