Nicola Reynolds
|Marketing Executive
With 91% of UK homeowners having no form of income protection in place, there’s no better time than now to bring this up with your clients. There’s a lot of common misconceptions around the importance of income protection and we’re here to bust these myths using some of our key claims statistics.
Illness can strike anyone at any age, and recovery often takes longer than you think. The average age of a UK first-time buyer is 321, while the average age of an income protection member claiming at The Exeter in 2021 was 372. This means that the point where an average first-time buyer remortgages from a five-year fixed rate product, could also be the age that they find themselves unable to work and struggling not only with mortgage repayments but wider bills and a rising cost of living too.
It won’t happen to me
The main reasons for claiming with The Exeter in 2021 were musculoskeletal conditions, illnesses related to Covid-19, hip/knee conditions and mental health. These accounted for almost 75 per cent of claims2. Most people may be surprised at these reasons as they’re not rare or unusual illnesses or injuries. They’re issues and problems people discuss on a monthly, weekly, or daily basis. It just takes one of these problems to escalate and become so bad they're unable to work and without protection in place, what are the implications?
Those policies never pay out
Clients may think insurance companies will try to wriggle out of paying, but that couldn’t be further than the truth. Did you know in 2021 we paid out 93% of claims? That’s £10.5 million across 1,226 members and their families2. We want to pay every income protection claim we receive, however, there are times when unfortunately, we are unable to do this. The main reason for not paying a claim in 2021 was due to misrepresentation. This is where questions are not answered correctly at the point of application leading to a different underwriting outcome. And this is where your advice can be invaluable. Keeping your clients right, ensuring they answer all questions correctly at the application stage and helping them understand the implications if they don’t will make a huge impact.
I’ve got savings to see me through
Another common objection is that your clients think their savings will see them through. But with 39% of people saying they’ve had to dip into their savings in the past year to cover their monthly living costs3, this may not be the best option. Employer sick pay doesn’t last forever and statutory sick pay is unlikely to cover the bills at just £99.354 a week. What’s more, self-employed individuals won’t get any sick pay without their own policy – so with this in mind, how will the client be plugging that shortfall? When you take into account our average claim duration in 2021 was just under two years for a full term policy2, do you think your clients could confidently say their savings will carry them for that length of time with the current situation? And it could be longer. Our longest claim in payment has been ongoing for 25 years2.
We’re here to help
At The Exeter, we understand the value of advice. So, we want to support you and your business. Whether that’s using our 2021 claims stats to handle those common objections, helping you to bring your conversation to life in a visually engaging way with our income risk calculator, or by giving you a personalised briefing session with one of our product experts. Please get in touch or visit our website.
Sources:
1. https://www.lloydsbankinggroup.com/media/press-releases/2022/halifax/halifax-first-time-buyer-review-2021.html
2. https://www.the-exeter.com/adviser/knowledge-centre/insights/our-latest-income-protection-claims-report-is-now-available/
3. https://www.ybs.co.uk/inflation-nation/index.html
4. Statutory Sick Pay (SSP) : Overview - GOV.UK (www.gov.uk)