RDR catalyst for income protection sales

Nia Williams

January 29, 2013

Speaking at the launch of the report into consumer perceptions of protection insurance, Le Beau said sales of this type of policy have historically been the lowest.

He said: “This probably says something about the appetite to sell the product among advisers. During our road show we noticed there wasn’t the same level of understanding and technical awareness of income protection as other policies.”

But as advisers will be able to earn commission from selling income protection, which they can no longer do from offering other products, sales income protection are expected to rise.

Nick Jones, marketing manager at Exeter Family Friendly, said there was a 20% rise in the number of advisers attending seminars on income protection in the last quarter of 2012, compared to the same period in 2011.

He said this was a combination of mortgage brokers who need to boost their income because of lack lustre mortgage sales and IFAs looking for alternative revenue streams.

He said: “If the RDR has the knock-on effect of encouraging advisers to look at IP more, albeit not because of the right reasons, it still has positive ramifications for the consumer.

“But over-complexity of income protection products hinders engagement from advisers and consumers and is something we have worked hard to overcome.”

The report highlighted that income protection was the policy most understood by consumers when they were asked to identify the correct definition of a range of protection policies.

But when asked which form of protection was considered to be essential, income protection only roused 19% of respondents compared to 50% for life cover and 26% for critical illness.

Jones said: “The legacy of payment protection insurance has made many people distrust the security of income protection but it is the policy which can be the most important because if you have not insured your income you cannot pay your household bills, or life and critical illness premiums.”

Jones added that insurers need to recognise that consumers and advisers do not have faith in the product or understand them and need to address this by making products which are straightforward.

The Syndicate research concluded that simpler concepts are necessary that “chime” with consumers while advisers need more training support to increase their knowledge and give them the confidence to sell the product.

Kevin Carr, chief executive of Protection Review said: “Advisers who sell the most IP start with IP, they don’t try to add it on at the end. If it isn’t a priority in the adviser’s mind then by default it also won’t be a priority in the client’s mind.”

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