Steve Bryan
|Director of Distribution and Marketing
When talking about income protection (IP) it may seem like the message is the same year after year. To some, we may even be a “broken record”. But for me, the record isn’t broken. It’s not played loudly enough.
Turn up the volume
Our overreliance on the state to provide financial support has never been in the spotlight as much as it has in recent times. But with furlough payments and the uplift in universal credit ending, the financial challenges faced by many UK families will continue.
IP is not the answer to the monetary challenges created by the pandemic. It does, however, have an important role to play in giving UK families greater financial resilience. It is key in providing a financial “Plan B” should our incomes be impacted by unforeseen events such as ill-health or injury. And because of this, IP should be a greater priority for us all.
Income replacement? There is only one winner.
The financial support provided by the government during the pandemic was generous. At its height, the furlough scheme replaced up to 80% of an individual’s income1. But in its absence, we must remember that such support is not always as generous.
Taking furlough out of the income replacement equation, what are the options for your clients if they are unable to work due to illness or injury?
Those with employer sick pay schemes may have the benefit of a higher proportion of salary being paid for a period. But what happens longer-term when the amount paid reduces? How would they cope with a reduced monthly income?
And for those with no access to employer sick pay, how would they manage on Statutory Sick Pay of £96.35 per week2 or Universal Credit which starts at just £257.33 per month3 depending on an individual’s circumstances?
When you consider the amount of personal taxable income that IP policies can replace in the event of a claim, (60% with most insurers), there is no reason why we shouldn’t be having more IP conversations than ever before.
Unlike furlough, IP policies may not be free for individuals to access, but at an average cost of £32 per month4, surely that’s money well spent. For those with tighter budgets or wanting to cover essential outgoings such as rent or mortgage payments, never has there been more choice for advisers to tailor cover to meet a client’s needs.
Press play and repeat.
Collectively we must ensure that we all have more conversations with consumers about IP than ever before in 2022. Research from The Exeter this year found that 67% of working adults were concerned about a loss of earnings because of illness or injury5. Whilst this may be front of mind for more UK workers, being aware of something and doing something about it are two completely different things.
The first-ever Income Protection Awareness Week run by the Income Protection Task Force (IPTF) provided a timely shot in the arm for the industry, reminding us of the importance of protecting our incomes from the impact of ill health and injury. It has provided us with a brilliant springboard from which we must all ensure we are doing our utmost to give more people a financial plan B.
With this in mind, I offer no apologies if I sound like a broken record by continuing to talk about the importance of IP. Why? Because I firmly believe in the message I’m giving. That now more than ever, the need for IP is greater than it’s ever been.
1 - www.gov.uk
2 - https://www.gov.uk/statutory-sick-pay
3 - https://www.gov.uk/universal-credit/what-youll-get
4 - Swiss Re Term and Health Watch 2021
5 - The Exeter Let’s Talk Insurance
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