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Protection Watch: Mental health moves and future-fit income plans

Protection Review chief executive Kevin Carr looks at recent market events

Moving forward on mental health

Some say perception is reality and, in a world driven by social media and sensitivity, the way people see things is their truth, regardless of whether their conclusions are accurate or feasible. This is not a bad way to sum up where the protection industry sits right now on underwriting mental health issues.

Like cancer or diabetes, stress and depression are genuine issues that effect many people and directly influence underwriting.

That is not going to change any time soon, but the way the industry manages certain areas could.

Several consumer press stories this year have asserted it is near impossible for people with a history of mental illness to get protection and that the industry’s practices are underhand or unfair. Advisers will know a specialist intermediary can help and the process, including contacting GPs and possible medicals, will be explained so the client understands what is going to happen before they decide.

However, as LifeSearch founder Tom Baigrie pointed out earlier this year, the industry is rarely judged by its best outcomes.

Instead, we need to demonstrate that excellent customer service is the average. Doing something in the same way because it is the way we have always done it does not wash any more. We need to be more open and transparent. More human.

Protection is deeply personal and when a claim or even an application is declined, we need to better understand this is a person, not a policy number. If the protection industry wants to remain relevant, let alone grow, it must get modern about how it underwrites and, more importantly, communicates.

Making income protection fit for today’s workforce

A Financial Services Consumer Panel discussion paper has called on the protection sector to develop less complex products, designed for the needs of people in the modern labour market.

The report explored consumer attitudes to life insurance and why people are more likely to buy critical illness cover instead of income protection.

The findings highlight more education is not the answer, nor is persuading more mortgage intermediaries to recommend income protection. The call is for the industry to respond with product innovations that offer value for money but suit the lifestyles of consumers, and which they are able to understand.

The Income Protection Task Force has welcomed the report. However, it believes collaboration is needed across all relevant sectors for significant progress to be made, including advisers, the Treasury and the Department for Work and Pensions.

DWP insurance sector champion for disabled people Johnny Timpson says: “Our understanding supports the view the key to solving these issues extends beyond just the development of new products.

“Following the announcement earlier in the year about mortgage payments, the Building Resilient Households Group and FSCP are working towards agreeing further insurance-related disregards, which will be essential in making sure we meet the needs of consumers, as suggested in the report.”

Also on the radar…

  • F&TRC has launched a new age-banded analysis of critical illness cover to better help advisers select which product is most suitable for their clients. A panel of medical experts have analysed each insurer’s definitions based on how likely a client suffering from a condition will be to successfully claim.
  • VitalityLife has launched a new risk calculator, which shows the likelihood of being unable to work, experiencing a serious illness, and the risk of dying. Cura Financial Services managing director Alan Knowles says: “This is a simple, quick and effective tool for advisers, with a few basic questions, meaning we can show clients the risk of a serious event occurring to them. Using this information, we can then highlight just how such an event could impact the client and their family. VitalityLife also brings a new dimension to this type of tool by showing how much you can reduce the risk through healthy living.”

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