In reality critical illness cover and IP are designed to meet different objectives and many people will need of both types of cover, but as far as it is possible to draw a comparison, IP is not more expensive.
It is too expensive
While it is easy to see why some clients might perceive IP to be expensive, it is more difficult to understand why as many as 71 advisers in the study actually believe it is too expensive.
According to SwissRe’s Health & Term Watch 2017, the average annual IP premium is £449; just £1.23 a day and for young professionals in good health sufficient to buy peace of mind.
To put this in context, a typical Sky TV package (Entertainment & Sports with HD) costs £578 a year. Also, according to Theos, the Theological Think Tank, on average, people spend £142.88 on draw-based National Lottery games annually and frequent players can spend £349.96 a year.
While the chances of winning the lottery are approximately 1 in 14 million, the chances of being unable to work due to sickness or disability during working life are much greater. Even £30 a month would buy a decent level of IP benefit.
Clients think their employer will cover them
Most people do not understand what their employer’s sick pay arrangements are; and the levels and duration of sick pay schemes vary considerably.
According to XpertHR, while 89.4 per cent of firms offer a period of full pay, of these, most pay it for less than four weeks (26 per cent); four week schemes and eight week schemes are also common (23 per cent and 18 per cent respectively). Following the period of full pay, less than half go on to offer a further period of reduced pay. Many employees will then rely upon Statutory Sick Pay and means-tested Universal Credit.
According to SwissRe’s Group Watch 2017, only 10 per cent of people are covered by long term disability benefit with their firms; also, of the 32m workers in the UK, 4.8m are self-employed and therefore do not have access to employer sponsored benefits.
There is a clear need for more information and annual statements on employee benefits, but advisers can prepare the ground by asking their clients to request this information from their employers before the meeting.
It won't happen to me
Clients seemingly do not think they will ever need to claim for sickness or disability. Sadly, many people do.
According to the Department for Work & Pensions (DWP), on average almost a million employees take sick leave for a month or more each year (Labour Force Survey Oct 2010 – Sept 2013).
Of the 6.8m people of working age that are claiming benefits from the DWP, 2.4m are on Employment and Support Allowance (ESA) and Incapacity Benefit (IB).
Questions appear on the last page of this article.