Insurance Review: Give the public the numbers

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With a one-in-five chance of having to take three months or more off work due to ill health, the public need protection

Twenty per cent of UK workers have no idea how they would cope financially if ill health forced them to stop working for six months or more, according to our 2016 Wealth and Protection Survey. Based on current employment data, this means more than six million Britons are vulnerable, lacking a back-up plan to tackle the financial impact of long-term incapacity.

The results show the large scope for advisers to add value with protection sales.

For example, 44 per cent of survey respondents planned to live off their savings if too ill to work but only a quarter of participants (in our 2015 survey) said they had enough savings to cover their monthly outgoings for more than six months.

People vastly underestimate the financial risk were they to be off work for several months. How would they pay their mortgage?

Apart from savings, the respondents pointed to three notable means of coping during long-term incapacity: one in four would use state benefits; one in four would rely on their partner’s income; and one in 10 would ask their parents for help.

Sole traders were in a particularly perilous position, being the most likely to say they had no idea how they would cope financially if they could not work for six months. With no shortage of specialist plans available for the self-employed, income protection cover would make all the difference for those people.

With the majority of Britons having enough savings to cover their essential outgoings for only a couple of months, and state support in the form of the Employment and Support Allowance paying only just over £100 a week, it is vital the public think seriously about how they would cope.

Statistically, there is a one-in-five chance of having to take three months or longer off work due to ill health, so it is an issue that should not be taken lightly. Fortunately, there are some great income protection products around that can neutralise this risk.

Tom Conner is director at Drewberry Insurance

Tip of the Month: Care Assistance Benefit

British Friendly has launched a discretionary benefit called Care Assistance Benefit, for both new and existing members.

The IP provider will pay a flat amount of £125 a week when the partner or child (up to age 18) of a member needs full-time care of 35 hours or more a week for a continuous period of four weeks. When a claim is paid, it will be backdated to day one and paid for a maximum of 26 weeks over the life of the policy.

At no point is state benefit assessment needed, so clients do not have to give up work to claim. Claims will be paid upon confirmation from a medical professional that full-time care is required, so no assessment of activities of daily living is needed.

News in brief

Tailored diabetes protection
Royal London has announced plans to launch a life cover policy tailored for people with diabetes, with sufferers asked targeted underwriting questions. The product is set to be launched in Q1 2017.

Key 3 for basic CI insurance
AIG Life has launched a basic form of critical illness insurance called Key 3, which pays a lump sum upon diagnosis of heart attack, cancer or stroke. It is designed to give a simple and affordable option to cover against critical illnesses by covering the three main causes for a claim at a reduced price.

Key 3 comes with access to Best Doctors, which can be used by the insured person for up to three years after payout, as well as access to AIG Life’s Claims Support Fund.

Research shows HIV cover
New research by Unusual Risks, the medical financial adviser, has revealed that the average amount of life cover for which HIV-positive individuals are insuring themselves is £134,733.