If the economic uncertainty brings mass redundancies, those affected could wish they had taken out unemployment cover
As the country tries to make sense of the economic impact of Brexit, the implications for protection probably seem less dramatic. After all, protection tends to be a long-term purchase that is less susceptible to volatility.
That said, the 2008 financial crisis showed us that an economic downturn and job insecurity could lead to an increase in demand for particular protection products, such as unemployment cover. Unemployment cover pays out a monthly benefit for up to one year to cover essential household bills should the policyholder suffer forced redundancy.
An Institute of Directors survey of just over 1,000 of its business leader members, held since the EU referendum, found 23 per cent were putting a freeze on hiring and 5 per cent would be making redundancies. In addition, 22 per cent of members were considering moving some of their operations outside the UK.
In the last recession, following the collapse in global credit markets, the UK’s unemployment rate rose from 5.2 per cent in April 2008 to a peak of 8.5 per cent in October 2011, amounting to an increase of 63 per cent.
Advisers must remind clients how vital it is that any worker wishing to gain unemployment cover does so before an announcement of redundancies has been made. With some insurers, a company announcement of redundancies in the press is sufficient to make the insured party ineligible.
So do not assume that, just because times may be about to become tougher, protection is off the table. Past experiences seem to suggest the opposite is true.
Tom Conner is director at Drewberry Insurance
The Exeter is trying to raise the appeal of one of the most important financial planning products by offering two months of free income protection to new clients as part of a limited special offer. Its Pure Protection, Income One and Bills & Things protection plans will include two months free of charge.
■ F&TRC builds bespoke Paradigm adviser tool
F&TRC has agreed a deal with Paradigm to build the first bespoke version of its Quality Analyser tool for the support group’s advisers. The initial stage will see Quality Analyser for protection tailored for the advisers of Paradigm Protect. Paradigm’s bespoke version, Quality Analyser ‘Express’, will enable advisers to run a qualitative comparison of protection products in fewer than 10 clicks, producing a compliant report that highlights the insurers that best match their clients’ needs.
■ L&G updates IP plan
Legal & General has updated its Income Protection Benefit plan, launching a two-year limited benefit product to meet growth at the low-cost end of the market. The new deal replaces the existing five-year version and permits multiple claims, with each claim allowable for a maximum of two years.
■ Epoq adds legal deal
Epoq has launched an added benefit legal service for protection clients. The service, Legal for Life, is specifically designed for the protection industry and gives policyholders a simple, online means of dealing with legal issues, thereby keeping clients in touch with their policy benefits and aiding retention for advisers and insurers.
■ Extended options
British Friendly has extended the deferred period options on its short-term IP products, Short Term Protect and Breathing Space. These products now have deferred period options of one, four, eight and 13 weeks, meaning British Friendly’s short-term IP products have the widest deferred period options on the market for one-, two- or five-year claim periods.