How Customers Purchase Income Protection 2018
Income protection provides long-term cover if an individual is unable to work due to injury or illness. The policy typically pays out until the client returns to work, retires, or dies. Payouts are usually aligned to earnings and are tax-free. A policy can pay out for as long as the individual needs, or the benefit can be capped.
The attitudes, preferences, and behaviors of customers purchasing income protection in the past 12 months differed depending on factors including whether they purchased independently or with advice, what triggered them to purchase a policy, their top financial concerns, and product features sought. In 2017, the income protection market insured 132,949 new lives and was worth £53.63m in new business premiums according to the Association of British Insurers.
Comprehensive cover overtook accident and sickness as the most popular income protection product for consumers in 2018. The sizable shift in customers opting for comprehensive cover over accident and sickness strengthened brokers’ position in the market, at the expense of comparison sites. The multi-line product is more complex and is therefore harder for consumers to quickly understand and purchase themselves.
Buying or moving house was the main trigger for customers to purchase a policy, with most having a mortgage. It is unsurprising that mortgage protection was the top feature sought by income protection customers. This was followed by salary protection. It is not only a mortgage that individuals may have to pay for, so protecting their overall salary could prove more beneficial.
The report How Customers Purchase Income Protection 2018, explores the attitudes, behaviors, and preferences of customers who purchased an income protection policy in the last 12 months. It explores distribution and the purchasing journey, policy purchase triggers, the financial concerns of customers, and brand selection. It also sizes the market using Association of British Insurers data.
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