This time next week, the final curtain will quietly go down on a campaign to promote the virtues of financial protection insurance.
No, not nasty payment protection insurance that rarely paid out, but income replacement cover that provides a regular income in the event of serious illness. An insurance that amazingly isn’t riddled with exclusions and surprisingly meets more than 90 percent of claims (miracles, it seems, do occasionally happen in the world of insurance)
The campaign, Seven Families, was launched in this newspaper in November 2014. Featuring seven families all blighted by a breadwinner falling victim to long-term illness, the idea was to demonstrate the liberating impact of income replacement cover on a family’s finances and outlook – not just in the financial uplift it provides, but all the ancillary support (counselling, for example) that comes with it.
For a year, the seven families were given the income they would have received if they had bought cover prior to their disability.
The hope was that the campaign would prompt more people to consider an insurance often overlooked – insurer Swiss Re has calculated that the ‘disability protection gap’ in this country currently stands at a staggering £200 billion a year.
Although Seven Families may have passed you by, it has been a success. Of the families supported, five of the breadwinners have been gently nurtured back to some form of work, something that is unlikely to have happened if the campaign had not run.
For example, Tracey Clarke, the woman we featured 18 months ago, is now busy pursuing a career as a writer and has found a confidence she didn’t possess before Seven Families came on the scene. Tracey, who is slowly going blind, cannot speak too highly of the support she, her husband Tim and guide dog Oakley have received from the likes of counselling service RedArc and Action for Blind People. Access to counselling services is offered by most insurers when people make a claim.
On a wider level, it seems the campaign has also helped encourage a pick-up in demand for income replacement cover – a 10.7 per cent increase year on year according to Swiss Re – although overall purchases remain pitifully low (107,000 policies were bought last year). Of course, there are many more things the insurance industry needs to do to make protection insurance fit for purpose.
Friendlier terms and conditions, written in plain English, would help. A more conciliatory approach towards disputed claims would also represent a big step forward as might a willingness among insurers to update old policies to make them more policyholder friendly.
A little more positivity wouldn’t go amiss either (for some strange reason, maybe inherent conservatism, insurers are reluctant to promote the value of the cover they sell).
Seven Families has demonstrated that income protection insurance can make a big difference. It’s now up to the insurance industry to build on its success and convince people that such protection should be the cornerstone of effective financial planning – and just as important as creating wealth.
Bright – Mortgages St Neots
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