I never thought the day would come when income protection would trigger, in my crumbling little mind, the lyrics to a famous Hot Chocolate song, ‘You Sexy Thing’ (don’t be embarrassed now, admit it – you have danced along to it at an adviser conference at some point in your life).
But the day did come – last Sunday as a matter of fact when the mighty Zurich revealed, exclusively to little old me, its latest income protection claims figures.
In the first half of this year, Zurich told me it accepted 100 per cent of income protection claims, paying out £6.2m of benefit with an average monthly benefit of £1,217.
To put these numbers into perspective, last year it met 94 per cent of income protection claims, paying out £12.3m.
Before I nearly fainted from the shock, all I could hear ringing in my ears, as this information hit my brain, was Errol Brown lead singer of Hot Chocolate, belting out the words to ‘You Sexy Thing’ (1975).
“I believe in miracles
Where you from, you sexy thing?
Sexy thing, you
I believe in miracles
Since you came along, you sexy thing.”
Yes, Zurich, you sexy thing!
An insurer paying out 100 per cent of claims? It’s time to crack open the Bollinger and rejoice.
It is fantastic that Zurich has this data to release. Of course, I have no way of verifying the information but I have no reason to believe that Zurich is telling the world porkies. (I would give up if it were and spend the rest of my days in a remote monastery eating porridge and tending to my strawberry plants and sunflowers).
I am a big fan of protection insurance – always have been and always will be. It was drilled into me at an early stage of my formidable journalistic career (on a FPC course run by the Chartered Insurance Institute) that protection insurance should be part of a household’s personal finance foundations. And that information, delivered by a crazy tutor who got me through FPC 1, 2 and 3 (yes, I know, Mickey-Mouse exams) has stuck with me through thick and thin.
Of course, until recently, the insurance industry has done all it can to make me doubt my belief in the importance of income protection as a key component of the personal finance jigsaw – rejecting claims on tenuous grounds, digging into people’s medical pasts for evidence of non-disclosure and generally playing hard ball.
The insurance industry has done all it can to make me doubt my belief in the importance of income protectionAnd the payment protection insurance misselling scandal has not helped the cause, resulting in many consumers damming all kinds of financial protection.
But now it seems insurers have woken up to the fact that if income protection is to become mainstream, the product has to be fit for purpose. In a nutshell, claims have to be met and advisers need to be armed with the tools necessary to convince clients that income protection insurance is an essential, not a luxury.
By tools, I mean informative gadgets such as LV’s risk reality calculator (try it out at www.riskreality.co.uk/gen) that give you an idea of what life has in store for you before you retire. Apparently, for every 100 individuals like me (god forbid, there can surely only be one of me) 32 will suffer a condition that stops them from working for more than two months before their retirement age. Twenty mini-mes will suffer a serious illness and 11 mini-mes will die (do I hear you say hurrah?)
The release of Zurich’s ‘I believe in miracles’ data could not be better timed. Slowly but surely, ‘Seven Families’ an initiative masterminded by the marvellous Peter Le Beau at the Income Protection Taskforce is coming together (he told me all about it at St Pancras Station in London a couple of weeks ago over a bottle or two of life enhancing Viognier).
With financial backing from 18 companies who have lobbed upwards of £340,000 into the pot, this is a project that will monitor seven families all hit by a long-term illness of the breadwinner. It will highlight the transforming impact on them as a result of receiving financial assistance (for a year) and the high quality rehabilitation awarded the breadwinner. It is being backed by the wonderful charity Disability Rights UK.
“There are two main aims with Seven Families,” Le Beau told me while Eurostar trains headed tantalisingly for the Channel Tunnel and beyond. “First, we want to make people aware of their financial vulnerability if they lose an income, especially as a huge number of people have no knowledge of their sick pay or that they will only receive small welfare benefits.
“Secondly, we want to show that with high quality rehabilitation – and the insurance industry is good at providing this through the likes of Red Arc and Best Doctors – a lot of people can be returned to work on a full or part-time basis. Although we are not going to plug income protection policies in this campaign, we do hope that it will help cement the idea in people’s minds that income protection is not PPI and it should be at the top of most people’s hierarchy of protection needs.’
I think the Seven Families Initiative could bring about a huge change in the understanding and appreciation of the need for income protection, by highlighting the enormous comfort it can bring to families whose finances have been compromised by long-term illness.
Income protection, you sexy thing! (It could catch on).
Jeff Prestridge is personal finance editor of the Mail on Sunday
