Often Confused With Payment Protection Insurance (PPI)
In a recent survey by Cirencester Friendly, it was found that over 75% of financial advisers believed that their clients confuse income protection with payment protection.(7) In this same survey, 63% of financial advisers believed that their clients weren't even clear on what income protection actually covers.
Although Payment Protection is often used to cover a mortgage or other loan it can just cover income generally. Payment Protection is considered to be an inferior product to income protection for the following reasons:
-- Many plans use a 'suited occupation' definition of incapacity;-- Policies can only payout for up to 12 or 24 months;-- The premiums charged can be reviewed by the insurer;-- Insurers do not typically publish their payout rates;-- Specialist evidence is often required for back and mental health claims.
The last point in the list above is of particular concern given that mental health conditions, such as anxiety, stress and depression, as well as muscular and joint disorders are two of the most common causes of long-term work absence.(8) It is estimated that 2.6 million people consult their GP with back pain every year in the UK.(9)
Not Offered By Comparison Websites
It is common to see many forms of insurance promoted through television advertising and many of these ads are produced by comparison websites. Unfortunately, most of these websites do not even offer income protection.
Of the top four comparison websites only one offers an option for true Income Protection, yet all of these sites call the payment protection products they offer 'Income Protection' (based on Money Supermarket; Go Compare; Compare The Market; and Confused.com).(10)
This common practice of calling payment protection products by the name of 'income protection' is extremely confusing for consumers and should be addressed promptly. It is in the consumers' interest, as well as in the interest of comparison websites, to promote and sell income protection, even if it is in addition to payment protection, thus providing a choice.
As income protection can be more complicated than other insurance products, Drewberry Insurance has built an online quotation system for income protection with an emphasis on consumer education, rather than just on getting a price. In order to increase the scope of income protection distribution, both Drewberry's existing partners and other relevant third parties will be able utilise this technology for their own benefit to help ensure more consumers have access to traditional income protection.
Notes
1. DWP Statistics, Unum Analysis (2012) 2. Liverpool Victoria Claims Data (2011) 3. DWP Statistics (2011), Drewberry Analysis (2012) 4. ONS (2008), Unum Analysis (2012) 5. Unum, How To Introduce GIP (2012) 6. Which? Money, Income Protection Guide (2012) 7. Cirencester Friendly Survey Data (2012) 8. CBI Absence And Workplace Health Survey (2011) 9. Arthritis Research Campaign (2002) 10. Drewberry Analysis (2012)
About Drewberry Insurance
Drewberry Insurance is a trading name of Drewberry Ltd, which operates as a whole of market insurance intermediary in the health and protection insurance markets. Drewberry Insurance offer insurance broking services for a range of individual and group policies, through the following specialised websites:
www.drewberrygroupinsurance.co.uk - Informational resource for implementing group health and protection schemes as part of an employee benefits offering.
www.drewberrymortgageinsurance.co.uk - Informational resource for arranging mortgage protection insurance, such as mortgage life insurance and payment protection.
www.drewberryhealthinsurance.co.uk - Informational resource for arranging both personal and family private medical insurance (PMI) plans.
Drewberry Ltd is an appointed representative of Chase Templeton Ltd which is authorised and regulated by the Financial Services Authority, register number 311612. Registered address: Vantage House, 1 Weir Road, London, SW19 8UX.
Contacts:
Drewberry Insurance
Andrew Jenkinson
020 8432 7334
Drewberry Insurance
Vantage House
1 Weir Road
London, SW19 8UX
enquiries@drewberryltd.com
www.drewberryinsurance.co.uk
