Make clients aware of cover differences

19 October 2009

Accident, sickness and unemployment cover and income protection are often mistaken as the same product but in fact they are like chalk and cheese.

Is there a danger that clients’ expectations of a payout under ASU will not be met because they thought they had IP? Are we spelling out the differences to clients and do they understand the likelihood of long-term sickness crippling their finances?

ASU is a general insurance product. It is cheaper than IP and has a maximum benefit period of two years. IP provides benefits for much longer than ASU - up to retirement age or a selected age depending on what was chosen.

Figures from the Department for Work and Pensions for February 2009 show that more than two million people were unable to work for more than six months due to illness or injury.

Some 60% of these individuals had been claiming for five years or more. If this happened to someone with ASU that benefit would stop before they could return to work.

Clients can claim on IP policies time and again. If returning to work is initially too difficult IP enables workers to return on a part-time basis and still receive some benefit. But for ASU no such proportional benefits exist.

If clients are clear that by paying less they may receive fewer benefits then it’s arguable that some cover is better than none but they need to understand the compromise and be able to compare products with ease.