As an industry, we’re still advising on many more critical illness cover (CIC) policies than income protection (IP) plans. IP sales are on the up. But even so, Swiss Re reported that in 2023 almost 370,000 more CIC policies were sold than new IP. That’s still a significant gap. Despite these numbers, it’s really not as straightforward as one usually being a better fit than the other. In many cases, the two can go hand in hand to provide more holistic coverage. Weighing up the chances For a start, we just can’t know which product a client will need without a crystal ball. But tools can give us a good idea of their chances. Our ‘What are the Chances’ calculator tells us a 35-year-old non-smoking male has a: • 5.3% chance of dying before retirement age • 6.6% chance of suffering a critical illness or dying before retirement age • 35.7% chance of taking one month or longer off sick during this period of time. Covering the short and long term The lump sum payment from CIC is attractive to many clients. Tens or even hundreds of thousands of pounds can be paid out. But if your client never works again, how long would this actually last? It’s worth noting that only 19% of claimants actually use their CIC payouts to pay off some or all of their mortgage. Medical treatment, replacing income, health improvements and everyday expenses are more common areas these funds are spent. Assuming our 35-year-old client earns £60,000 a year – our IP could provide a maximum annual benefit of £36,000. With a standard retirement age of 67, the policy has the potential to pay for 32 years. That’s a staggering £1,152,000 worth of claims potential if needed. 12 AUTUMN PROTECT NEWSLETTER Dave Butler Market Development Manager L&G Retail Holistic cover: Blending Income Protection and Critical Illness
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