Protection  

Company-based IP sales need advice: Mason

The protection adviser from London-based Masons Financial Planning said anything that raised the profile of income protection was “good for all”, but he warned that advising on the product remained “a challenge” for many advisers who lacked sufficient training.

He said: “We’ve all got to work together because there is a real need for income protection for many out there, most just don’t realise it.”

Mr Mason’s comments came after Zurich’s chief executive Gary Shaughnessy wrote to the Treasury last week calling for a yearly rebate of £50 per person to companies and individuals earning between £20,000 and £41,000 a year who take income protection.

Article continues after advert

In the letter, seen by Financial Adviser, he said: “Every year individuals who are unable to work due to disability receive £190m more from insurance than they would if they had not been covered. The taxpayer is £185m better off as a result.”

Mr Shaughnessy wrote the letter after Zurich commissioned a report that claimed if more individuals bought income protection it could save taxpayers hundreds of millions a year.

He added: “Employees are alarmingly under-insured, with great risks for those whose lives are turned upside down because of illness.”

Background

In the 20-page report, Income Protection – working together to improve take-up, economist Kyla Malcolm said a combination of inertia, under-valuing the benefits of income protection and high up-front time costs to research the product was preventing individuals from taking cover.

She argued that there is a strong case for “intervention”, adding that a rebate could see government save £725m a year and claimants covered by the insurance £820m a year better off.

Zurich calculated that the cost of a rebate to government would be around £300m over two years.

The insurer suggested this cost could be directly funded in less than two years from the annual £185m savings made from saved welfare benefits, increased tax revenue and rehabilitation services.

Adviser view

Roy McLoughlin, IFA at London-based Master Adviser, said: “Promoting income protection in the workplace is a good idea, but it must be supported by advisers. It would also sit neatly alongside the auto-enrolment conversation many employers are already having with employees.”