Despite plenty of good intentions and the strong likelihood that whatever is left of the welfare state will provide even less of a safety net in future, income protection sales continue to disappoint.
As Income Protection Task Force chairman Peter le Beau highlights in this week’s issue, the 120,000 IP policies sold each year are a tiny speck on a 20 million potential market highlighted in a recent Government-backed review.
The workplace will play a big role in any significant IP increase and there is plenty of lobbying about using auto-enrolment or tax incentives to encourage greater take-up.
Unum research suggests long-term illness costs businesses £3.1bn each year or £620,000 per annum for firms with over 500 employees. IP also offers the Government a chance to cut its welfare bill.
But while industry lobbyists are busy highlighting the fiscal and business benefits of IP, more needs to be done to convince the general public about the dangers of being uninsured and tackle confusion over its interaction with state benefits.
Step forward the IP Taskforce. Next year it will embark on a campaign to highlight the impact serious illness and disability can have on families, alongside working closely with the Money Advice Service to promote IP. It is also helping to create a simple questionnaire on whether IP is likely to affect an individual’s benefits.
It is obviously very difficult to engage people on matters they’d rather not think about.
Working with a range of charities, the IPTF will identify up to 10 families where the main breadwinner has suffered a serious illness or accident. It will then look to support the family for a year through a charitable donation from a trust funded by insurers and reinsurers.
TV production companies have shown an interest in making a series to highlight the impact of such payments. Getting this message out to a large TV audience would have a huge impact on the public’s awareness of the need to protect their incomes and the depressing outlook for those who don’t in the event that disaster strikes.
The IPTF speaks of breaking the “depressing link” between disability and poverty. Tax incentives or auto-enrolment could have a major role to play but such policies will only succeed if there is buy in and understanding from the public. The IPTF’s Family Support Initiative could be a big step in the right direction.