Addressing the barriers to income protection sales

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).

IP is not simply about the insurance but also about the claims support and early interventions that can aid rehabilitation.

These are the benefits currently paid to people that cannot work due to sickness or disability. Additionally, as at October 2017, 630 thousand are on the new Universal Credit; some of these also will not be able to work due to incapacity.

According to the Association of British Insurers (ABI), the average IP policy pay-out is for 214 weeks, more than 4 years; and insurers report average length of IP claims up to as much as seven years.

Advisers don’t focus on it as much as other protection policies

This is an admission that the lack of IP sales are in reality down to the lack of inclination of advisers rather than any antithesis from clients, who are largely suggestible.

When pressed further, many of the reasons for this lack of focus are similar to those that the respondents had already attributed to the clients. They claimed it was: harder to sell than other products (24 per cent); seen as secondary to life and critical illness cover (19 per cent). 

They also cited a lack of understanding or knowledge (16 per cent); claimed it was too hard or complicated (13 per cent); highlighted underwriting complications (10 per cent); or talked of a commission bias (7 per cent).

Clients think state benefits will be sufficient if they were unable to work long-term

State benefits are not generous. Under Universal Credit, a single person over 25 could receive £317.82 plus £318.76 if they have limited capability for work and work-related activity.

Additionally, they might receive up to £260.64 housing benefit (1 bedroom or shared accommodation). This comes to less than £900 a month. According to the Office for National Statistics, total average household expenditure is £531.20 per week.