Simple products still need thought

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As the simple products conversations between the industry and the government continue – creating protection products that are less complex and simpler for the general public to understand – we need to tread carefully when discussing the overall simplification of income protection and critical illness products. 

Simple is good when you have clear groups and segments and a product or service can be tailored specifically to each segment. The problem is everyone is different. They live in different places and with different situations.

Simple is fine when the cost is relatively insignificant but when you’re talking about a more significant financial outlay and ongoing payments, products need to be more tailored to provide true value.

In the case of financial protection, simplifying products too much may lead people to purchase products without advice and make wrong choices, leading to disappointment when they come to claim. If this happens, we may cause significant damage to the reputation of the industry and indeed the government.

I  welcome a move towards simple products, which give customers their first step on to the protection ladder when it comes to covering the costs of a funeral, for example.

But for me, the challenge is how the industry and the government work together for a longer-term sustainable solution.

Many people in work have little idea about what the government would provide should they become unemployed through illness. And it’s impossible to know what the benefits system will look like in the future.

Unless you know what welfare you are entitled to, it is very difficult to make an informed decision about your future insurance needs.