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Income Protection now and in the future

Having been in the business 30 odd years there has been no radical shake up of the  Protection industry, yes critical illness has come on the market but that’s about it.

Life assurance can’t really change as dead is dead, once upon a time you did whole of life with convertible term so there was always a policy in place at time of death, now it’s all term assurance, mainly due to the fact the whole of life generated potential profits therefore you have to be an IFA to advise on it.

Having carried out research on PHI a lot of the “sales” ideas go along the line of “if you had a money making machine would you insure it………” that’s been going for as long as I have been in the business and these days the money making machine would be leased.

There is also a trend in telling us , how long we are statistically going to live or the chances of suffering an illness etc etc.

This follows the old training idea of “backing up the Hearse and let them smell the roses”

Who cares what the statistics say, my mate Dougie drinks and smokes like a trooper, who always said I will never make old bones and at 70 he proves statistics wrong, unfortunately his son died last year aged 31 from cancer.

So If we designed our own Income protection product which reflects the real world that we work in everyday advising everyday clients, what features would we want to see, what underwriting conditions would we need, what sales aids/ technology would help us.

Maybe underwriting at the point of application.

more flexible deferred periods for those who get 10 days sick per year for example.

mortgage related income protection especially for the self employed. They have proved their income for the mortgage so shouldn't be that hard.

I don’t know about you but I don’t tend to tell clients that statistically the are going to die in 20 years or do you know at your age that you have a 25% chance of getting cancer.

What they do want to know is where will the money come from if……….

Your thoughts appreciated.”

I know you've been around for 30 years but it sounds like you've just skipped over products.


If a client has 10 days sick pay that makes 2 weeks deferred on a policy and all kinds of providers have 2 week deferments??? companies have day 1, 1 week, 2 week, 4 weeks, 1 month, 1 year, 2 years, vitality has the self employed one on 10 days or something as well. I think you need to just revisit whats already out there or refer your IP clients to a 2018 adviser.


Brexit has already shaken up enough clients saying I'm worried the company will take away my sickpay etc so I don't know how much more you want to shake up the industry for IP... 


Maybe you can come up with something revolutionary like a system...we can call it assureweb or ipipeline...then put int their specific dates of birth and occupations...then find out about their sick pay and savings and then base the product and price off of that? that would be mind blowing!

Swanney you raise lots of relevant points and I agree IP as a product has been underdeveloped, but I guess this is due to sales with 10 CIC plans sold to 1 IP. I don’t think the large insurers have much incentive to spend money in this area and they want to sell to class 1 occupations in any case.

Any innovation in this area is going to come from the friendly societies and as advisers we probably should look to work closer with them as they are prepared to spend to further develop their products.

In the self-employed market I think an IP plan that had options to add a lump sum pay-out on some Critical illnesses could well be useful, but I am sure everyone has their own ideas

LV= do additional lump payments on IP. I think if you did a little deeper there is probably an answer to every point that was raised, the Exeter can decide to pay the full benefit out as a lump sum as well, companies have fracture cover, rehab, terminal illness cover, death benefit, waiver included, waived premiums for unemployment, split deferred, virtually every deferment apart from 3 weeks actually...

Yes LV have good products although I wasnt aware they could make lump sum payments however you make my point for me its the friendly societies at the forefront not the large insurers when it really should be them driving development

Royal London have fracture cover as well

Aegon have fracture cover,]

Lv- have the lump additional payments, an almost cic cover for kids included within the IP as well, automatically kicks once the sick pay for doctors, surgeons, dentists and teachers goes down whilst still quoting on a 12 month deferment.

AVIVA have fracture cover  for extra plus ligaments

Cirecenster are the only friendly with fracture cover but it's an extra.


They've all made massive strides apart from L&G of course but once again I think you 2 would need to find out what's there first before slating IP because in actuality they do most of what you've questioned and if not all of it so it's things like that why it's undersold or has a better stigma and thats from advisers and not even clients?!


I think its undersold because the providers dont put enough effort into educating advisers combined with the fact there is more awareness of CIC with clients in general making it an easier sale.

And oviously the Commssion from CIC sale is normally better compared to an IP plan

Ok now you're just going on random unfounded logic, please show me evidence of a provider paying out less commission on the same premium as a critical illness policy, that would be like saying a £50 premium pays out more than if you do life and cic???


IPP typically pays out more because some are age costed as well, its all relative and tbh a non factor if we're talking about what's best for the client, its not like an accident/sickness commission.


I dont know a single bdm that doesn't talk about ip alongside the cic unless it's something they dont offer like zurich used to not have and aig. you cant blame the providers, LV have it plastered all over their site, zurich have it all over ipipeline, the friendly societies specialise in it, royal london revamped theirs, like i said it seems this is more internal than external. 

No its not random or unfounded that is the reason that some give for not advising IP. Just becuase you think its nonsence doesnt mean that others think that.

What we are doing here is trying to work out why brokers are not advising IP and you are working on the basis that everyone else is lkike you.

As an example I have no face to face protection BDMs available to me and the phone BDMs rarely make cointact with the exception of one. Lots of brokers (rightly or wrongly) dont visit the websites very often so while I agree it is all over the LV site that wont always reach the full intended market.

Yes Aviva or Zurich will pay the same commission for IP as they do for CIC but when are they the most competitive.? Mostly it will be the friendly societies that are the most competitive Exeter, British Friendly, Holloway, Shepherds etc granted its due to age costed premiums or limited benefits but when your knowledge is not all it should be and you dont have confidence in a product area are you going to consider the pruducts further down the premium list or look at the cheapest?

When you look at the cheapest quotes the friendly societies pay less commission and are often longer clawback periods which is a put off for some.

I spoke to a BDM a few weeks ago that asked which firms I was using for IP not only did he not know why brokers use the friendlys he hadnt even heard of some of them.

If brokers are going to be trained by BDMs the industry is in trouble.

Just tried to place a case with LV, self employed chiropractor aged 27.

Rejected, Why

Plays unpaid Sunday Rugby.

Once again the smaller friendly society covered him.

Downside, underwritten at point of claim like most others.




l20jgs-  i was referring to your comment about the commission as unfounded. 

we sound like clients saying its the BDM's fault about our knowledge when the information is there, providers usually email you weekly with updates but if you turn off all marketing, don't go on websites and block the banners then that's on the individual adviser, we're supposed to be doing CPD anyway and in theory that would be your time to research or just keep up to date with at least 1 provider a month. Providers offer webinars on IP.


Swanny, did the guy do rugby union or league and get travel paid for? I actually prefer to put my clients with LV for Rugby because they definitely take them on, 50% loading or an exclusion general, depends if it's PSP or the proper protection plan. Do you use their online presales too much?

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