Self-employed wrongly believe IP doesn’t pay
The survey, conducted in April 2015 among 502 self-employed workers, revealed that lack of trust is one of the main reason for not taking out a protection policy.
Only 2% of respondents believe that income protection claims are paid more than 90% of the time by UK top insurers and nearly one in five believed claims are paid less than 20% of the time.
At the same time almost one in two of those surveyed (45%) believed the main reason income protection claims are declined is because insurers deliberately try not to pay claims. The perceived expense is also a concern, with 30% listing it as the main reason they don’t own a policy.
This explains why 90% of respondents do not have any kind of insurance policy in place that would help to replace their income in the event that they are unable to work long term because of their health.
Yet the risk to their finances is very real – when asked whether they or anyone else they knew had ever been unable to work due to illness or injury for three months or more 35% said yes.
Furthermore, the survey revealed that 58% of respondents said their business would have to stop trading immediately if they were unable to work for at least the next 12 months due to health reasons.
A third said knowing there is a good chance of a claim paying out was the most important reason for choosing an income protection product beating price in second place.
Mark Myers, chief executive of British Friendly, said: “We need to recognise that because certainty of claims is most important to self-employed clients, providers and advisers need to prioritise how we can effectively communicate to them that insurers pay a very high percentage of income protection claims.
“Insurers pay over 90% of claims on average and British Friendly paid over 96% of all claims in 2014, yet the public are not aware of this fact.
“It highlights the need to continue promoting the message that consumers are vulnerable and that those people with insurance policies are better protected and do have their claims paid. The consumer really does value that information.”