Tim Evershed reports on the upcoming inaugural Income Protection Awareness Week
Income protection (IP) is often said to be the forgotten insurance product, overlooked by advisers who sell far more life insurance and critical illness cover. However, IP’s advocates say it should be the cornerstone of financial planning strategies and fear it is being drastically undersold.
Now, the Income Protection Task Force (IPTF) is launching its first Income Protection Awareness Week, a campaign supported by events running from 20-24 September this year.
The campaign is aimed at increasing awareness of the need for IP and will use the hashtag #LetsTalkIP on social media.
It will involve a series of live, free-to-view online events, including live panel discussions, case studies, tools and tips, and shareable material aimed at helping insurers and advisers to have more IP conversations with new and existing customers.
Areas of focus include quantifying the size of the opportunity and the latest updates on underwriting and claims, with more details being released in the run-up to the event.
IPTF co-chairwoman Jo Miller says: “The fall in IP sales in 2020 was disappointing but perhaps understandable in the context of a pandemic. The need to protect incomes in the face of unexpected events has never been easier to demonstrate to clients and we believe it is vital that we seize the opportunity we have now, sharing expertise and views on the best way to get the message out to customers.” The week was inspired by Disability Insurance Awareness Month, which runs annually in the US. The ITPF says it hopes to bring together insurers, reinsurers and advisers, while it also hopes to reach out to networks. There will be a central hub from the IPTF as well as there being at least one hour of video content and a new infographic, training aid or training video produced. There will be a day focused on mortgage advisers, a day on wealth advisers and a day on underwriting and claims. At the end of the week there will be pledges, which will be followed up four weeks later.
Julie Higman, income protection product manager at Aviva, says: “It is a difficult product to promote to consumers because 99% of the time it needs a customer to be in front of a financial adviser to actually discuss the product. So, reaching consumers can be quite challenging.
“A lot of it is about the industry – financial advisers are often strapped for time when they have a customer in front of them, especially if it is in conjunction with a mortgage, meaning that income protection has often been the forgotten product.
“It should be extremely simple and straightforward. If someone is working, they are earning an income, they are earning a wage; if you are at risk of losing that if you are sick or injured, then you should consider IP. It should not be any more complicated than that. The products are out there that are built to dovetail with any sick pay that people might get. It is your own personal furlough scheme.”
If the last year has shown us anything, it is how fragile our incomes can be
However, research by the IPTF has shown that although loss of income would be financially devastating to most people, many of them hope to find a way around having to make these difficult decisions by relying on family or friends to help them out. This is a perilous approach, with very few households accumulating enough savings to see them beyond six weeks, let alone support another family. State benefits are often assumed to provide a safety net, but few clients realise that in many cases they would not even cover basic expenses.
Ms Higman points to the £1bn-plus of protection claims paid by Aviva from more than 4,000 claims last year, as well as the support services and expertise offered by the insurer’s claims staff.
The goal then is for the ITPF to help insurers, advisers and customers understand the protection afforded to them with an IP policy.
Alan Knowles, managing director of Cura Financial Services, says: “We need to raise awareness and debunk some myths. It still surprises me today that there’s so little IP sold. It is arguably the most important financial protection policy available, the one that anyone who is working or has an income through a job should have. But a lot more people have critical life cover and life insurance. A lot of this comes down to awareness and to financial advice.
“I have heard all sorts of things through the years – IP is expensive, IP is hard to get, we don’t need IP – and they are all so far from the truth. So, debunking some of these myths and letting people know that these products are accessible, that advisers can get them, is the most important thing. If the last year has shown us anything, it is how fragile our incomes can be.”
Tim Evershed is a freelance journalist