Income Protection  

What can the industry do over protection?

  • Describe the importance of people taking out income protection
  • Identify some challenges with vulnerable clients
  • Describe the impact that mental health issues have on a client
CPD
Approx.30min

In fact, 42 per cent would much prefer to answer questions on mental health issues via an online survey.

When asked about their propensity to discuss physical health with an adviser or insurer, the picture was quite different: 78 per cent saying they would feel ‘comfortable’ doing so and 36 per cent feeling ‘very comfortable’. And many people thought believe that suicide is automatically excluded from life cover as standard.

Clearly, stigma around mental health is largely responsible for the differences seen here, but the reluctance to discuss anything mental health related might also have something to do with the fact that insurers and advisers simply are not equipped to manage such sensitive discussions.

A separate survey carried out by Protection Review and Alea Risk, focused on the industry view.

It found that when mental health has impacted the underwriting decision to either exclude, load or decline cover, in over a quarter of cases (26 per cent) the person responsible for this communication has ‘never’ had appropriate training with regards to managing potentially sensitive areas around mental health. Two in five (41 per cent) have ‘sometimes’ had training in this regard.

Six in 10 (64 per cent) would welcome greater flexibility around the underwriting outcomes for mental health issues, rather than just having accept or decline.

The survey also revealed that there is a lack of policy and consistency across the industry when it comes to helping those faced with exclusions, loadings or declines to obtain more palatable terms.

Over half (55 per cent) do not have a process of referring individuals to a specialist adviser.

Is there a role for insurers and their third-party specialist service providers to help with training and support for advisers? If the adviser opinion at Protection Review was anything to go by, such a move might be very well received.

2. Insurers and advisers need to come up with better - and much more consistent - ways to support those with pre-existing conditions.

Helen Undy, chief executive of the Money and Mental Health Policy Institute (MMHPI), speaking at Protection Review, said people with a mental health problem are 3.5 times as likely to be in problem debt; and half of adults with problem debt have a mental health problem.

She highlighted the difficulties around access to insurance:

  • High prices. Even for someone with historic periods of mild depression who is no longer showing any symptoms, much higher premium increases are being applied in comparison to someone with equivalent physical health issues that show no symptoms any more.
  • Exclusions. This problem is two-fold. Individuals either face the inability to access insurance that properly covers them, or they think they have cover when they don’t because the exclusions haven’t been properly explained.
  • Disclosure. Getting access to the right product is often just too difficult. “It’s hard enough to speak to health professionals about this stuff, never mind insurers,” adds Ms Undy. 

The upshot? “Vulnerable people pay more,” she says. “If they can get cover, they stay with the same insurer and pay inordinate premium increases rather than face having to disclose again.”

She adds that group income protection (IP) currently represented “one of the best products for someone with a pre-existing condition and working for an employer that offers this is one of the best ways to ensure peace of mind for anyone with a history of any level of mental health issues”. She called for the conference attendees to consider how to widen access to group IP, particularly among SMEs.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Which of the following does protection NOT help with:

  2. People feel more comfortable talking about their mental health than physical health with their adviser and insurer. True or false?

  3. Why do vulnerable people end up paying more for cover on income protection?

  4. How long have one in four people taken off work as a result of mental health issues?

  5. Encouraging people to buy protection trhough word of mouth is more effective than telling people via a top-down approach to buy insurance, true or false?

  6. Which of the following is NOT a means of encouraging trust with consumers?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe the importance of people taking out income protection
  • Identify some challenges with vulnerable clients
  • Describe the impact that mental health issues have on a client

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