Addressing the barriers to income protection sales

Had he instead purchased life and critical illness cover, assuming modest long term investment rates of 5% per annum, he would need a lump sum benefit in the region of £300,000 to meet this need. At current rates this would cost approximately £76 per month; two and half times more expensive.

Advisers can prepare the ground by asking their clients to request employee benefits information from their employers before the meeting.

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.