Advisers and providers have admitted more work needs to be done to prevent income protection being tarred with its “toxic” association with payment protection insurance.
In a meeting held by the All-Party Parliamentary Group for insurance and financial services last week, chairman Jonathan Evans said income protection suffers from being confused with PPI.
He said: “It’s not that the product is toxic, but that’s the way the product is viewed amongst the public.
“All political parties are agreed the welfare state is going to contract and it’s therefore necessary we start to stimulate a proper participation market. Yet we are struggling to do that against this backdrop.”
Money Minder Financial Services managing director Ray Black agrees. He says: “There has to be more done to help people understand the difference between PPI and IP.
“Proper IP is clearly a different product, but it could do with some more positive press about how important it is.”
Basi & Basi Financial Planning managing director Michael Basi adds customers fear IP will not cover them as reliably as other products.
Basi says: “Customers look at it and think there’s lots of uncertainty and lots of clauses for things like how you define illness.
“Why isn’t there a product in the market that simply says that when a doctor signs them off, it will pay? Simpler products would probably be more successful.”
Insurers admit the wider benefits also need to be better understood. Aviva product propositions manager Jonathan Platts says: “We recognise there is still a long way to go to raise awareness of the full benefits of protection.”
“We believe it is the responsibility of insurers and advisers to inform and educate people, both on what the Government will and will not provide, and how insurance can help.”
Zurich group protection manager Nick Homer argues it is questionable whether protection is being highlight enough alongside mortgage sales.
He says: “It’s just not given the promotion it should be getting.”