The Protection Review and the Income Protection Task Force are considering developing a protection hierarchy of needs which would set out what types of cover advisers and consumers should prioritise.
The organisations are encouraging feedback from advisers and the industry to reach a majority agreement on the protection products that should be offered as a first port of call.
They say that once a hierarchy has been developed it could be used to improve consumer awareness about protection generally and ensure advisers are selling the right products. Any hierarchy model would assume consumers have no existing cover, are in good health and have a realistic budget.
It is likely that income protection will be recommended as the default starting point, specifically IP that offers own-occupation cover.
This might then be followed by critical-illness cover, which includes cover for early-stage cancers.
Life cover, private medical insurance and other products or product combinations would also feature in the hierarchy model.
Protection Review chief executive Kevin Carr says: “The bottom line is the industry is selling the wrong products. Around 100,000 IP plans are sold each year, compared with 500,000 CI policies and one million life policies. But losing your job through ill health, which IP covers, is considerably more likely than dying. It would be good to have an industry debate and challenge how the model should take shape.”
Highclere Financial Services partner Alan Lakey says: “It is an encouraging idea but the problem is that consumers have to be interested in the idea in order for it to work and advisers are deeply entrenched in their attitudes about what protection products they want to sell.”