April 22, 2021
Income Protection (IP) – has Covid shaken up the status quo?
Blog by Phil Nash, Director, UnderwriteMe
Income Protection…if you’re anywhere near as old as I am and have worked in the Protection industry for some time then the next sentence may well strike a chord with you. I’ve worked for a good handful of Protection Insurers, watched many presentations at industry and intermediary events, read more articles than you can shake a stick at, and even designed my own IP/ASU (Accident Sickness and Unemployment) product, sourced a carrier and made it available for some of the leading Aggregator sites in the UK.
What’s the common denominator with these points? Well, it’s actually the fact that none of them have significantly influenced the volume of IP Sales in the UK over the last 10 or 15 years and that nothing’s really changed…or has it?
That’s not to say that as an industry we haven’t had some successes and that things haven’t improved. Insurers have introduced IP Product enhancements, increased the number of options available, and added some great member benefits. We’ve seen budget IP (or limited benefit payment IP policies) overtake full-blown IP in recent years, keeping up with customer needs and affordability. The IPTF (Income Protection Task Force) Seven Families initiative did actually give the numbers a boost a few years ago and was a really well thought through project, demonstrating the financial impact on real customers had they not received insurer support at the time they most needed it.
But what’s changed in 2021 isn’t insurer product enhancements, a change in underwriting philosophy, or improved UX… it’s the biggest challenge that Advisers have always faced – helping customers to understand why they need to protect their most vital asset – their income.
Due to the far-reaching effects on health and wealth that have touched us all from the dreaded C-word (Covid-19), this has now changed dramatically. The wider population has never been so aware of financial vulnerability and it’s the industry’s job to ensure we educate around options of protection.
I remember my wife telling me a story some time ago about how a friend at work had just been lumped with a £900 vet bill after a dog attacked her cat and it sadly lost an eye. My first question (I’ve possibly been in financial services for too long) was “couldn’t she claim for that on her pet insurance policy then?” and was met with the response “errr… she didn’t have any pet insurance.”
I didn’t ask, but no doubt once the cat had recovered, hopefully, this became a reality rather than something ‘other people have.
From an industry and IP perspective in particular, what Covid has done is poke the general public in the eye and reminded them that without a monthly pay packet your whole world can potentially be turned upside down.
So, it hasn’t surprised me to read recently that the number of searches and inquiries around Income Protection has surged, in particular from younger people as they are more likely to have been financially affected by the recent lockdown. If consumers don’t see the need for this product in 2021 following the dramatic events of the last year, then it’s a fair bet that this message will always be a tough one to get across.
The question to ask right now is how long will this awareness last for?
Prioritising Income Protection in 2021 is possibly more appropriate for Advisers and easily understandable for customers than potentially ever before.
 J. Brazier (2021). ‘Income protection interest surges among 25-44 year olds’, Cover Magazine, 22 March. Available at: https://www.covermagazine.co.uk/news/4028829/income-protection-interest-surges-44-olds