Income Protection - Nobody's child?

Income protection is the single most important financial planning need and the first consideration in any financial plan.

Yet the income protection gap is £190bn and the sales of income protection insurance are falling year on year. Advisers, insurers and commentators pay lip service to this important product but it remains ‘nobody's child'.

This year's edition of Defaqto's annual Income Protection Insight Report explores challenges facing Income Protection Insurance (IPI). It focuses on the products currently available in the market place, highlights the reasons for the general poor take up of the product and identifies ways in which the situation can be improved.

Commenting on the launch of the report, author Ben Heffer, Principal Consultant at Defaqto says: "Product complexity and affordability are major barriers to sales; the simpler products present greater risk to the insurer and increase costs for the client; achieving a more affordable product for the client inevitably means asking more detailed questions at the application stage."

Defaqto canvassed the opinion of IFAs in an independent survey on the IPI market. The feedback from this survey is contained in the report and gives a clear insight into what is important to advisers and the issues they have with IPI.

"IFAs find IPI difficult to sell because of the combined effects of cost, complexity and perceived lack of need," says Heffer.