There has been a debate about the increase in income protection recommendations and even some speculation about whether income protection could eventually overtake critical illness insurance in terms of policies sold. At Guardian we think the increase in income protection sales is a welcome development. It’s great to see that more clients are recognising the impact illness could have on their income and looking to mitigate that risk. But, when it comes to a discussion of which type of protection is best, it doesn’t need to be an ‘either/or’ conversation. Our view as a provider of critical illness cover and income protection is that there is merit in each, depending on client circumstances and indeed, the ability to put forward a bespoke menu recommendation is very powerful. Trends in product types across the market Looking at the overall trends, the good news about income protection comes in the context of a fall overall for the year in long-term protection insurance. The Swiss Re Term and Health Watch report for 2023 (published this May) showed that term, whole of life, critical illness cover and income protection were down 5.5% in 2023 compared with 2022¹, no doubt driven by the economic context. In 2023, income protection sales were more than a silver lining. New income protection policies increased by 10%, rising to 198,566 with growth in both ‘to retirement age’ products and 2-year limited payment term products, which grew by 12.5% and 12.2% respectively. What’s driving these trends? We also know all too well that our customers and your clients have faced some very testing times from the pandemic and subsequently soaring costs often including mortgage costs. It’s very likely that these costs are reflected to a degree in the contraction in overall sales. However, we’d say to anyone trying to understand the market to not just accept that obvious explanation or at least not solely. For example, our research with advisers over recent years, confirms that we did see a change in clients’ attitudes because of the challenges to their health and wealth posed by the series of crises. We might suggest that with changing priorities and even mindsets, some clients may be more open to income protection and what it can do for them. The ability to control costs by selecting a longer deferred period, or shorter payout period, may also be a factor in income protection’s growing popularity but we need to talk to advisers to really get a full picture. Anecdotally, we know that more advisers are considering, discussing and recommending income protection so it may be that years of work from protection market influencers, among them many 16 WINTER PROTECT NEWSLETTER Rachael Welsh Head of Marketing Guardian Income Protection’s role in the protection mix
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