Zurich UK Life chief executive Gary Shaughnessy has written to the Chancellor to push for a tax rebate to be introduced for income protection plans.
In a letter to George Osborne last week, Shaughnessy cited the insurer’s own research which suggested a £50 rebate for policyholiders, payable annually for two years, would cost the Government around £300m. This would then be offset by higher tax revenues and reductions in welfare payments.
Shaughnessy said individuals who are kept from working due to a disability receive £190m more from insurance than they would have through benefits, resulting in a saving after costs of £185m for taxpayers.
He estimates there would be an annual potential benefit of £725m to taxpayers if the coverage of group schemes in the UK rose to the same level of coverage in America.
In his letter, Shaughnessy says: “We think a £50 a year incentive from Government, lasting for just two years, aimed purely at basic rate taxpayers who have or take up IP, would provide a huge impetus to the market.
“Zurich’s own calculations suggest the cost of such an incentive would be around £300m in total, but should be offset by the increased tax revenue and substantial reduction in welfare payments made.”
Plan Money director Peter Chadborn says: “Anything that can be done to encourage people to take control of their finances, has to be good for the individual and in turn, good for the government.
“The amount is not the key thing here, this is about encouraging people to protect themselves properly.”