Raising IP awareness

Income protection is regarded as a priority purchase by those in the industry, but unfortunately the public does not share this view. Take-up of income protection remains low with estimates suggesting that as little as 10 per cent of the working population has cover through group and individual schemes.

The latest sales figures do little to suggest this is set to change. Although there was a slight uptick in Swiss Re’s figures for group income protection as pensions auto-enrolment pulled more employees into group risk schemes, the individual product saw its new business figures nosedive in 2013.

The reinsurer’s research found that, while the number of people covered by group policies increased from 1.96m to 2.04m last year, sales of individual income protection fell by 24.4 per cent to just 90,794 new policies.

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Some of this decline can be explained by changes in market conditions. The introduction of gender neutral pricing in December 2012 coupled with the new ‘I minus E’ taxation rules created a flurry of activity earlier that year as advisers rebroked cover to secure better deals for their clients. “These figures show you just how much new business was really rebroked policies, with the Swiss Re report estimating that, in 2013, as much as 85 per cent of sales were genuine new business,” says Phil Jeynes, head of account development at PruProtect. “It is a sobering thought though that there are more people working in the protection industry than there were individual policies sold last year.”

Seven Families initiative

In a bid to raise awareness of income protection and increase sales, the Income Protection Task Force (IPTF) has developed a new initiative, Seven Families. First proposed in 2013, this was formally launched in May in partnership with the charity Disability Rights UK.

The initiative aims to help seven households, which will be selected by Disability Rights UK, where the breadwinner is unable to work due to sickness or accident. They will then be provided with the support they would have received if they had taken out income protection.

This support, which is expected to start in September, will include a replacement income of around £20,000 for a year but also rehabilitation and case management. This is designed to help the individuals regain their health and, where possible, return to work either in their old job or in a new role that reflects their capabilities. In addition, the IPTF also expects to be able to offer free financial advice to the families from IFAs supporting the campaign.

Peter Le Beau, chairman of the IPTF, explains the objectives of the initiative. “It is not about attacking welfare benefits or pushing income protection; we want Seven Families to highlight the financial vulnerability of families. We also hope it will demonstrate how good rehabilitation is at helping people return to work. Once we have proved the value of income protection we will introduce the product into the conversation.”

Achieving publicity will be key to the initiative’s success. As well as promoting Seven Families to the media, the IPTF intends to run a social media campaign using Facebook and YouTube to follow the families.