"The nature of explaining a plan recommendation to a client revolves around the reason for selecting a particular plan and must be articulated in an understandable way. This can be difficult as the vast majority of consumers do not understand the various options available or the range of terminology used."
- Alan Lakey, director and historian at CIExpert
Discussing CIExpert’s expansion, Alan Lakey, said that it has generated great interest across the industry and that a number of insurers have discussed launching their own Income Protection (IP) pages within the Insight Zone. “We have regularly been asked by subscribers to extend our coverage to encompass IP as this then creates a one-stop-shop,” Lakey revealed. He felt that it was important to enable advisers to obtain knowledge of an insurer’s menu options and provide access to an overview of the plan benefits for quick referencing.
Considering that without sustained income, Life, Critical Illness (CI), Pension and Investments could trigger a financial meltdown, Lakey believes IP has been accepted as the most important protection plan among advisers. However, this sentiment seemingly isn’t shared by consumers with the uptake of IP plans remaining very poor compared to other financial products. Although Lakey noted there has been a “welcomed increase in popularity” since the Covid-19 Pandemic, “these plans still show up poorly, relative to Life and CI.”
“Like Critical Illness, these plans can be complex with each provider offering different deferred periods, maximum end ages, and maximum benefit levels, exacerbated by differences in underwriting and the impact of being a smoker or working in certain occupations.
“Because there has been no system available to advisers that can meaningfully highlight such differences, the potential for getting it wrong has been high and I believe that this has dissuaded many advisers from venturing into the area.”
As well as the importance of a “one-stop-shop,” Lakey highlighted the negative impact of tax treatment. “Benefits from IP plans are paid free of income tax but the Government has not learned the lesson of personal pensions where tax relief is given upfront and benefits are taxed,” he explained. If this were reversed, it would “immediately encourage advisers and consumers alike to take interest and, of course, will prove of benefit to the Chancellor of the Exchequer with the reduction in Universal Credit payments.”
Discussing the essential information required when advising on IP, Lakey noted that CIExpert’s Insight Zone provides details for all “key elements” so that it’s easy for an adviser to get a quick overview and drill down into the detail. Highlighting that this approach has proven to be very successful with CI, Lakey confirmed the same technology combined with visually interactive tools has been applied, not only to support the adviser but crucially to help them convey their recommended rationale to a client.
This includes, but is not restricted to, the income thresholds for maximising the income, range of deferment periods, minimum and maximum ages and maximum end age, underwriting impact of various occupations and pursuits, and claim definitions e.g. own occupation, suited, etc…
Insurers’ own viewpoints are also provided, incorporating contact details, links to portals and registration forms, sales support materials as well as their own infographics and case study videos. Lakey said this will support advisers and clients alike, offering easy access to useful materials for encouraging interactive client discussions.
“It can prove a complex calculation when attempting to assess the maximum amount that can be insured so we have developed an interactive maximum benefits table that enables the adviser to easily see what maximum income is available based on annual earned income,” he added.