Income protection insurance essential for financial health

Income protection insurance (IPI) has an essential role to play in providing financial security, says Defaqto.

In its latest report, the UK’s leading financial product research company has called for insurers and advisers to show greater commitment to this essential protection product.
Defaqto believes that it not only protects an individual’s current standard of living but also their future financial well-being, should accident or illness strike and they are unable to work.

However, analysis by Defaqto reveals that sales levels are continuing to decline, indicating that insufficient numbers of consumers appreciate the need to protect themselves against the financial consequences of a loss of income. It believes that insurers and advisers should demonstrate their commitment to this essential protection product and that providers need to offer uncomplicated, low cost products that provide attractive alternatives to payment protection insurance policies.

Report author Nick Telfer, Defaqto’s head of life and protection, said “I recognise that some insurers have taken steps to simplify the application process but still more needs to be done to improve the appeal of the product itself. Besides being intrinsically complicated, comparisons between different provider offerings are extremely difficult. If this important product is not to wither away through inertia, the industry needs to rethink both how to improve the general appeal of the product and how the product itself can be developed to meet the differing levels of needs that exist in the market”.