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Action is needed to boost customer understanding

An overwhelming 94 per cent of product providers believe the industry and FSA must do more to differentiate pay- ment protection insurance and income protection in the eyes of consumers.

The findings are revealed in Lifesearch’s 2008 protection research and comes as the adviser firm continues to urge providers to boost their marketing to improve consumer understanding of protection.

It surveyed 23 insurers and five reinsurers and found 44 per cent have increased their marketing budgets while 33 per cent have set the same size.

It shows 77 per cent believe tele-underwriting is likely to be the most successful way of reducing non-disclosure. The three main actions that providers claim to be taking to address non-disclosure are focusing on tele-underwriting, simplify- ing application forms and imp- roving promotional literature.

Over half of respondents believe radically new product developments are very likely this year but most do not see the new style products already on the market, such as Pru- Protect, faring well when it came to sales.

The research shows 40 per cent of providers believe income protection sales will increase this year while nearly half expect sales for critical illness to drop.

Providers were split on the prospects for life cover sales but half believe the price of cover will finally flatten out. For critical-illness cover, 43 per cent say it will continue to get cheaper this year while 38 per cent believe it will flatten out.

Eighty-eight per cent of providers say they will still be offering protection products through advisers in two years time but more than half are adamant that consumers will not be prepared to pay a one-off fee for protection advice.

Of the half that also sell products direct to consumers, 80 per cent still expect to be doing this in two years time.

Lifesearch policy advisers Matt Morris says: “The outlook on the whole is positive but there seems to be a broad consensus that there are a few areas that need to be worked on, such as the difference between income protection and PPI, which is good for consumers.”

What do you think will happen to life cover sales in 2008?What do you think will happen to critical-illness sales in 2008?

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