Many people are missing out on protecting themselves against a loss of income through illness - due to the complex nature of the insurance products available.
The income protection industry is facing tough times at the moment, a new report from data firm Defaqto suggests.
According to the Income Protection Insight Report, which was released yesterday, people in the UK are currently underinsured for the cover by around £190 billion. Moreover, it points out that sales of income protection continue to fall year on year.
Income protection is a type of insurance which is taken out by customers to cover themselves against being affected by a major incident, such as illness or injury, which prevents them from earning a living - by paying them a livable wage. However, Defaqto said in its report that the complicated nature of this protection makes it an uphill task for Independent Financial Advisors (IFAs) to sell it on to customers.
Commenting on the launch of the report, author Ben Heffer, principal consultant at Defaqto, said: "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."
He added: "IFAs find income protection insurance difficult to sell because of the combined effects of cost, complexity and perceived lack of need."
