Written by Justin Taurog, Managing Director VitalityLife
As an industry, we know income protection cover should be high on a client’s priority list giving them and their family greater financial security should they be unable to work due to ill health. Historically, however, this hasn’t always been the case.
In fact, recent consumer research undertaken by Vitality revealed only 13% of people with protection insurance in place have covered their income.
However, the appetite for income protection is there. It’s reflected in the recent uptick in income protection sales across the market. Our research also revealed one in three people were interested in purchasing some form of insurance to protect their income if they were unable to work due to ill health.
However, if we are to continue to grow IP sales, the market needs to innovate, move with the times, help them to live in better health, offer greater value, and ensure products are more relevant and flexible.
More relevant cover
With 10% of people having no savings to fall back on*, statutory sick pay only amounting to £116.75 for up to 28 weeks**and a large proportion of employers reducing sick pay after two weeks, the payout from an income protection policy should be reliable regardless of any change in a client’s occupation or earnings.
By further innovating what and how they offer protection, there are opportunities to appeal to a wider range of individuals. Many income protection plans only offer earnings assessment at claim, which means any change in earnings, such as from a job change or having to reduce hours due to ill health – could negatively impact a payout. This is one of the reasons we offer an earnings guarantee which means that if a member’s earnings at the point of claim are less than their Earnings Guarantee established at the start of the policy, the higher level of benefit is paid. More immediate value
The cost-of-living crisis has gone a long way to raising awareness of the public’s financial fragility, with our research showing 50% of people say it has hurt their ability to save for a rainy day*. This provides useful context to highlight income protection’s relevance at the moment and how it offers both peace of mind and protection if you need it.
This ongoing engagement with members means advisers can regularly review cover and ensure it is up to date, while at the same time, engaged clients are far less likely to cancel their plan*. No longer do they see their insurance as something to file away in a drawer, instead they see value in it every day.
Help people to live in better health
Even before an income protection claim is made though, there’s a role that insurers can play – with the help of advisers – in helping to prevent a claim from occurring in the first place. We live in a world today where we see the impact that positive lifestyle choices can have in helping us to live healthier, happier lives for longer.
By linking the delivery of tangible value through stronger product engagement in a digitally intuitive way, products can strengthen client relationships by generating loyalty by giving them something they want from day one.
By actively encouraging clients to move more, eat better and take part in activities that are good for their mental and physical health (and rewarding them for it), not only do they have the security of cover should a claim arise, but they are less likely to need to make one, offering them additional value from day one of their policy.
