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Defaqto urges providers to close income protection gap

Provider apathy is the biggest threat to the development of the income protection market and behind the current sales slump, according to Defaqto.

In the research company’s latest report, Income Protection Insurance 2007 – A time for action not words, Defaqto urges insurers to innovate and simplify their products and take definite action to widen income protection’s appeal.

According to Defaqto the market is currently dominated by complex and inconsistent products which stifle any consumer enthusiasm.

It claims simple and non-advice channels, where income protection is sold alongside a primary sale, require an uncomplicated low-cost product while advisers require a more advanced income protection plan.

Defaqto head of life and protection Nick Telfer says: “Providers must lead the way and show greater enthusiasm and commitment to this essential area of protection. If they do advisers and consumers will follow and the income protection gap will close. Doing nothing is no longer an option.”

Telfer says many of the current products do not recognise that consumer demands are more sophisticated and the distribution landscape is becoming increasingly complex.

He says continual tinkering will only make things worse and that the industry should start again.


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No woolly thinking

Knitting has never been a core competency of the Institute of Financial Planning as it is not seen as totally relevant to the development of the profession of financial planning. There might clearly be some lifestyle benefit to the hobby but I gather that it is all too easy to drop a stitch, meaning the whole thing has to be unravelled.

Cazalet fears MVRs hitting with-profits

Independent analyst Ned Cazalet warns that the stockmarket volatility could see the return of market value reductions on with-profits policies.Cazalet says although life offices are much better equipped to assess their liabilities than they were during the stockmarket crash in 2003, the recent choppy market could see providers reintroducing or raising their MVRs.Norwich Union is […]


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