Published on 21/06/2012
Research shows that people are unwilling to take out income protection insurance because they can’t see themselves needing the cover.
Income protection insurance is designed to pay you a monthly income if you cannot work through accident, sickness or unemployment. It will usually cover up to 70% of your monthly income, and the money is tax free.
Income protection insurance is arguably one of the most important insurance products on the market, because accident, sickness or redundancy can and do happen to people from all walks of life. You are more likely to claim on income protection than critical illness or life insurance.
But according to research by financial company Defaqto, 60 per cent of financial advisers say clients do not think they need income protection insurance. 39 per cent also say that the product is too expensive for their customers.
The report, titled Review of Income Protection Products, says that people do not believe that will get ill for an extended length of time.
However, someone who has been off sick for 6 months or longer has an 80% chance of being off work for 5 years.
Many people also think that if they could not work due to accident or illness, they would expect the government to support them financially. Others say their savings would see them through. But Employment and Support Allowance only pays out £99.15 per week to eligible claimants.
Defaqto has called on advisers to make more income protection insurance recommendations to customers. Ben Heffer, Defaqto's insight analyst for life and protection insurance, said:
“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."
© ActiveQuote Ltd. 2012Categories: Income Protection