Income protection benefit does not have tax deducted, according to Julie Higman, income protection product manager of Aviva.
This means claims paid from an income protection policy will not be subject to either income tax or capital gains tax, according to Martin Sincup, income protection manager of LV.
Present UK tax law and HM Revenue & Customs practice means you don’t get tax relief on premiums paid, Ms Higman adds.
In terms of regulatory requirements, Dougy Grant, protection director of Aegon UK, says the selling of short term income protection must follow the rules laid down by the Financial Conduct Authority.
Obligations implemented following the Office of Fair Trading’s Review into the selling of payment protection insurance must also be met.
He says income protection and group income protection sales are regulated under either the FCA Conduct of Business rules (COBS) or the Insurance Conduct of Business (ICOBS) rules.
Advisers can choose whether to sell pure protection products under either the COBS or ICOBS rules.
The rules stress the importance of meeting customer needs and not creating undue barriers to comparing, exiting or switching cover.
LV’s Mr Sincup says this means if you can sell life cover, you can sell income protection.
Most is sold on an advised basis, or with limited advice, according to Mr Sincup, though as with life cover or critical illness a small amount is sold execution-only.
It can be sold in the usual ways: face to face, over the phone, online, etc, and Mr Sincup says as with any protection product, there is varying quality so it’s worth shopping around and comparing features.
As protection insurance sales do not fall under the definition of retail investment for the purposes of the Retail Distribution Review, new rules introduced in January 2013 preventing adviser remuneration in the form of commission do not apply in this area.
