In an October survey of 1,000 working adults, 52 per cent said they thought the language used to explain products such as income protection was easy to understand.
For those who thought income protection was difficult to understand, almost half (47 per cent) said it was due to too much technical jargon.
A similar number (45 per cent) said it was because of unclear explanations of what the policy covered. Two in five (42 per cent) said it was unclear when or how the policy would pay out.
A lack of clarity was also present among those who had a level of familiarity with income protection.
Of those who had income protection or considered purchasing a policy, the research found a quarter (26 per cent) thought it was difficult to understand what the benefits were, what it covered and when it would pay out.
This was more common among employed workers at 32 per cent, compared to 20 per cent of self-employed workers.
Steve Bryan, director of distribution and marketing at The Exeter, said: “The jargon and complex language which the industry is guilty of using is making it much more difficult to raise awareness of protection and means advisers face an uphill battle before they even start talking about insurance with customers.”
The insurer’s research found half (53 per cent) of working adults said they associated the term ‘protection’ with protecting themselves from physical harm, and 48 per cent associated it with legal protection.
Matthew Chapman, commercial director at Plus Financial Group, commented: “Within the insurance industry we do tend to use overly complicated language and jargon when describing the products we advise on and how they work.
“Probably borne out of a genuine fear of the conduct risk associated with saying the wrong thing or not being accurate enough with our explanations.”
Chapman added: “You only need to look at the complexity and wording of a provider’s key facts document, which is supposed to be a distilled version of the policy terms, to see how easily a consumer could get confused.
“As advisers, I believe we should aim to simplify our explanations in order to get more people engaged in the concept and the fundamental need for the cover in the first instance, before we delve into the policy particulars.”
He continued: “When describing what income protection is, for example, I try to use the simplest and most relatable explanations that I can.
“I often refer to IP as ‘lifestyle insurance’, ‘permanent private furlough’ or a ‘sick pay extender’ to help the client understand the basic premise of the plan. Only then do I go into the detail of what is covered and not.”
The Exeter’s findings come after the Chartered Insurance Institute (CII) issued guidance in December to help insurance professionals close the expectation gap between what customers expect insurance products to do and what they deliver.
The CII’s guide encourages members to “positively and proactively” enhance clarity of wordings for the average consumer, and to aim for all reading material to be understood by those with a reading age of 13 or less.
chloe.cheung@ft.com
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