Insurers and govt told to remove 'perverse incentives'

She explained: "The basic premise of financial protection is easy enough to understand on a 'this happens; we pay' sort of basis but the choices to be made during the purchase can be complex and overwhelming for consumers.

"Added to this, the interaction of self-provision with state provision is extremely complex and can be a negative driver for consumers who are otherwise motivated to take out protection insurance against a catastrophic life event such as disability or long-term illness."

Ms Moxham pointed to Swiss Re's 2018 Group Watch report, which showed the importance of workplace protection. She highlighted that employer-sponsored group risk products could give 12.5 million employees access to "material levels" of financial protection, without them having to take financial advice, worry about it being affordable or worrying about the cost of advice. 

She added: "Of course, employer sponsored group risk products give people access to financial protection insurance without them having to do any of the hard work.

"The employer takes advice on the benefit design and cover levels. These can be aligned to their goals and contractual obligations or purely based on good or competitive practice.

"The employer will also take advice on the suitability of providers by way of a market review. This process is undertaken regularly and thus keeps design appropriate and costs down."