Clients don’t believe in income protection

Clients don’t believe in income protection
don't want

60% of advisers believe income protection is difficult to sell because clients don’t think they need it, according to research by financial research company Defaqto.

In addition, 39% of advisers said that clients couldn’t afford it and 38% said that it is too expensive.

Defaqto’s latest Review of Income Protection Products, suggests that people cannot envisage themselves being sick for any length of time; and that, if they are, there is a belief that the state will provide – while others think that they would have enough money to tide themselves over.

The take up of income protection insurance remains low despite the fact that it is one of the most important protection products on the market, Defaqto says.

While advisers generally accept that income protection is important to have, they say that many people find it unaffordable and some advisers themselves have concerns about whether policies will pay out.

The report says that long term income protection insurance is an advised sale, but in the future there may be fewer advisers to distribute income protection if some leave the market in the wake of the Retail Distribution Review (RDR).

Defaqto says providers need to place greater emphasis on helping and supporting advisers to encourage them to make more income protection recommendations and become more ardent advocates for the product. The report highlights the main issues which are of concern to IFAs and the product developments which are needed to address these for the IFA sector. For those insurers interested in servicing the mass market, products will need to be easier to buy, cover the key needs and be very clear about what is and what is not covered.

Ben Heffer, Defaqto’s insight analyst for life and protection insurance, said: “Within protection advice, income protection should be the first consideration in most scenarios. The emphasis on marketing life and critical illness cover can often result in income protection being overlooked, when in reality it should be the foundation of the financial planning process.”