Income protection is one of the most useful insurance products you can purchase but take-up is low in the UK.
According to the Association of British Insurers' 2014 report, 'Welfare Reform for the 21st Century', only a small proportion of the UK populace has some form of income protection.
It revealed that fewer than 1.2 million people have bought individual income protection insurance, while approximately just two million more people are covered by group income protection insurance provided by their employer.
This means out of an estimated working population of 33 million UK adults, only 10 per cent have any form of income protection - despite the fact the UK government's austerity cuts mean relying on the state to provide may be an option for a shrinking group of individuals in the coming years.
This guide will explore why there is a need for income protection in the UK, how employers can help to bridge the income protection gap, how advisers can use income protection as part of holistic financial planning for families, and ways advisers can destroy some of the myths about insurance products.
Contributors of information to this guide are: Jennifer Gilchrist, protection proposition design for Royal London; Paul Avis, marketing director for Canada Life Group Insurance; Andy Simmons, senior income protection specialist at Vitality Life; Martin Noone, managing director, workplace health and protection at Legal & General; Steve Bryan, director of intermediary at Legal & General; Jeff Woods, business development director at Sesame Bankhall Group; Paul Litster, managing director of Specialists4Protection; Mark Dennison, principal of LightBlue UK; Adam Higgs, adviser services and head of research for F&TRC; Damian O'Connor, managing director of Roxburgh Financial Management; Robert Harvey, independent protection expert; Emma Wilson, employee benefits consultant; Meena Ibrahim, independent protection adviser; Tom Conner, director at Drewberry; Katharine Moxham, spokesman for Group Risk Development; Iain Clarke, distribution and marketing director for British Friendly; Nick Homer, group protection manager, corporate propositions for Zurich; Stephen Crosbie, protection director at Aegon UK; and the Association of British Insurers.
Quotes shown are for a 40 year old male who doesn’t smoke. Policy is £100,000 life insurance cover for ten years with a fixed premium. Example is for illustrative purposes only and was correct on 21/11/2016.
The most common form of protection, ordinary term life cover pays a lump sum to your family if you die within a certain time-frame. Most policies will also pay-out if you’re diagnosed with a terminal illness and have less than twelve months to live
Critical Illness Cover provides a cash lump sum if you suffer from a range of serious conditions within a set time-frame. The money is normally used to pay the bills and provide financial security while you’re on the road back to health
If something serious happens to stop you working - for months, years, or even for life – you’ll want to know you have financial security and that the bills are paid. Income Protection gives you just that, paying a percentage of your income all the time you’re unable to work.
The NHS is groaning under the weight of the UK obesity crisis and newer, more effective medical treatments for a range of illnesses often aren’t available. Private medical cover makes ‘going private’ much more affordable – giving you access to more treatments, shorter waiting lists, and first-class care.
Most company directors are savvy enough to have life insurance, but very few realise they can save up to 53% by taking advantage of a Relevant Life plan.
Group Life and / or Health Cover is the most cost-effective way to provide peace of mind and financial security for the families of your employees.
Key Person Insurance - often called Key Man Cover - is an insurance policy bought and owned by a business to protect its own interests. Cover is provided in the event that an important staff member is suddenly unable to work through critical illness and/or death.
Shareholder Protection Insurance is designed to give you peace of mind in the event that a shareholder in a Limited Liability Company, a member of a Limited Liability Partnership (LLP), or a partner in a partnership dies or is diagnosed as critically ill.
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