Hi everyone, we have Jo Miller back with us to talk about all things Income Protection. The last time Jo joined us was in 2023 to talk about the brilliant Income Protection Taskforce and there have been a lot of changes since then. With a new Board and lots of changes in the IP world, Jo is bringing us some great insights from the IPTF profile of an IP customer report.
We are going through what’s working well in the IP world and what we would like to see change if we had a magic wand. I know that my magic wand wish will not be popular with many people!
The key takeaways:
- Men are still far more likely to take out income protection than women
- The IPTF are wanting to promote the way that ASU products can work, where income protection is not possible
- A case study of arranging income protection for a Barrister, where you must be on top of how the deferred period is going to work with their ongoing income stream
Next time Lee Doran from William Russell is joining me to discuss international protection insurance. We’ve been planning what we will chat about and I’m very excited as I advise in this area, and we’re really going to get into why underwriting international cover is not always straightforward.
Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website.
Kathryn Knowles
Hi everyone. We’re on season 10, episode six, and I have Joe Miller with me from iptf. Hi, Joe, hi Kathryn. Today we’re going to be talking about how income protection is working right now, what the whole industry in the world of IP is doing. This is the practical protection podcast. So before we get into things, Jo, how are you doing at the moment? How are things
Jo Miller
I’m doing? Very well. Thank you. Busy as ever. But I’d always prefer to be busy than twiddling my thumbs.
Kathryn Knowles
Absolutely I’m exactly the same. I keep trying to do it where I keep trying to, sort of like reduce projects, or sort of like, not take on as much stuff, and then I just find myself sat there and I’m like, well, this isn’t working either. So it’s like, Bring on the next thing. So we’re going to be talking, obviously, about income protection. Very much. What’s going on in the income protection Task Force? I know they’ve got quite a few things to cover for anybody who is listening. I’m sure you all know about income protection. We had, we talked about a few different approaches today and but it is. Exactly what we would think it to do. It’s an insurance policy that is protecting somebody’s income if they are ill and unable to work. And the last time we did an episode Joe was in 2023 which is so so long ago now, which feels insane that it was that long ago. It didn’t feel that. It didn’t feel like it was that long and but what’s the latest then with iptf? What’s going on? Yeah, so
Jo Miller
time really has flown since we last spoke. I guess the key changes to highlight at iptf would probably be in our leadership. So we’ve got Vicky Churcher and myself now at the helm, and this year we’ve also introduced a board to provide some oversight and keep us accountable to members and the wider industry. We think this is really important at a time when we’re all under greater scrutiny with the FCA market review there, I’ve said it in the first five minutes. So we’re we’re indebted to our board members, Christine husbands and Peter Lebow, for providing guidance for us this year on that.
Kathryn Knowles
Yeah, I was going to say, I mean, it’s, I know, obviously being involved in the PDG a bit as well, through Alan and everything, it is so important to have those structures there, because obviously there’s, there’s so many people to be accountable to, but then also in terms of making sure that we’re getting exactly where we’re expecting to be in terms of the goals, the strategies that we’re meeting them. And it’s surprising. I think, you know, when you get involved in, you know, in sometimes with things like this, it’s almost starts off as like a bit of a sub project, or like a side project to what you’re doing, and then it becomes, oh, this is an actual entity to itself, and it really becomes like this behemoth, in a sense of, like, trying to organize it and run it. And I know that you’re absolutely as you say, you’re so, so busy with it all, aren’t you?
Jo Miller
Yeah, I mean, to your point, you know, you try to scale down, you try to keep focused on on key ideas. But Vicky and I don’t really work like that, we are, you know, known for the 9pm WhatsApp messages, oh, I’ve had an idea. So the board is actually really helpful for keeping us focused and giving us a plan and keeping us on track. Because there’s so much we could do, so much we want to do, but we need to prioritize and and do it in a logical way. But the good news is, there’s plenty to keep us busy for years to come. Yeah,
Kathryn Knowles
absolutely. That is very, very good, I imagine, for the next few years sort of lined up. But something you have been doing is you’ve published a report, haven’t you about the profile of an IP customer. So what is this report? Where can people get it? What are the findings, all that kind of info. So
Jo Miller
yes, we worked with IRESS on this to analyze their IP applications, and we looked at all their data points in 2023 and we’re shortly updating it. Actually, you can find everything on our website, iptf.co.uk, the initial report, which is out already looks at the it’s a sort of analysis of IP customers, so it tracks the sort of demographics, the behavioral shifts, really, between 2017 and 2023 and to give us some insight, so who is buying IP and, I guess, most importantly, who isn’t, who’s not even applying, so that we can be informed in our behavior. So I’ve got some key findings to throw at you if, if you’re interested. I’m
Kathryn Knowles
gonna have quite a few oohs and ahs as we go along. Excellent,
Jo Miller
excellent. So we had 2023 was the record year for IP sales. So we saw 16% increase compared to 2022 so we saw short term policies have seen the largest increase. I think that’s ahead I’m probably familiar with, and that’s up 82% since 2017 so that’s compared to a 20% increase in full term policies. So we can really see that it’s where the growth is. We can see that younger generations are leading that growth. So we’ve got Gen Z and millennials accounting for nearly 70% of all applications in 2023 if we look then at average age, we can see that it’s increased slightly. In 2017 it the average age of an IP customer was 37 it’s now 39 so it’s it’s heading up, and we can see that 72% of applications came from people who were 45 and younger. So if we start to then think about who our underserved markets are, we see that once we’re over 45 missing fewer applications. If we look at gender, we can still see that men are 50% more likely to be purchasing IP than women, which. You have to do something about
Kathryn Knowles
do we think? I was going to say, I mean, I’m sure that this wouldn’t be in the data, but could that be still down to the stereotypical roles of the women tend to stay at home with the children, so it’s, it’s maybe not I was going to say, you know, certainly we do need to work on this, but it might be the case that women aren’t in and in work, so they’re not applying, because they tend to be the one that’s staying at home more. Yeah. So it’s always so tricky, isn’t it, because you try and think of all these reasons, yes, why? And because, I mean, it seems huge, 50% more for men than than for women,
Jo Miller
absolutely. And I mean, the truth of it won’t be any one reason. It will be things like advisor conversations and advice. You know, there are more men advised male advisors than female. It might be product flexibility. You know, as women, we have more caring responsibilities, more likely to take career breaks, other products, keeping up with that. There’s any number of things that we we need to look at what’s what’s actually interesting that came out of the report is that women are more likely when they do purchase to purchase full term policies than men are. So that is quite interesting for us to consider. I
Kathryn Knowles
think, again, a bit of like a traditional family world. I think, like the women tend to be the long term planners, yeah, and if me and Alan in offense, I’m the long term planner. I’m planning our retirement and all that stuff. And Alan just turns up every now and then, probably once every six months, and goes, so what’s our money doing? And I’m like, okay,
Jo Miller
exactly, very much so. And then if we look at professions as well, that probably explains some of that bias as well. So the most common buyers of IP are medical professionals, professionals. So you’ve got doctors, nurses, care assistants. And then if you look at short term, most common customer professions are HGV drivers, delivery drivers. What’s really interesting is that US financial service professionals are way down the list and rank relatively low in terms of number of IP policies purchased. So surprise me.
Kathryn Knowles
I was gonna say that doesn’t surprise me, because I think it’s one of those things where you know why you get so many advisors. Have their own advisors. Because actually, when it’s doing your own stuff that I know so many people who are advisors, and I’m like, have you sorted out that policy? Have you sorted out that trust just to know them? And they’re like, you know, kind of like, not, yeah. I’m like, Oh, come on. Just like, Yeah, seriously, but yeah, I think that that’s yeah. I don’t think I’m that surprised about that. But then again, I’m going to go on a tangent here again, so I do apologize. I partly wonder if that is partly due to so like when i Obviously I speak to lots and lots of ifas, get lots of people introduced to me. And income protection is really hit and miss in terms of, if you’ve got a full IFA, whether or not they see that’s worthwhile to their client, because they’ll say, Well, I’ve got this plan for the pension, and this plan for this, and this plan for and this, it’s all so much for that long term plan and and sometimes saying, you know, getting that no matter what, which you know, Unless you are the very, very wealthy. I mean, exceptionally wealthy. It’s going to be a huge shock to the financial plan if that person’s in and can’t work. And that’s something that we always try and, like, really speak to with ifas, and it’s like, says, Look, you might not think IP is needed, but what happens to this client if they can’t work from tomorrow? And, yeah, but it’s still really hard, I think, to change that mindset. At times about that, I am seeing it though. I am seeing more and more advisors the full ifas start to go, do you know what? Actually? Yeah, let’s, let’s double check the IP option. So that’s really positive that that message is trying to come through, but it’s definitely an error. Still work to do. Yeah, definitely, there’s still work to do. Most
Jo Miller
definitely. I mean, we, we that’s you will hear Vicki and I say it starts with income, whatever you’re fighting on, all those plans are predicated by the client having a regular income. So, and we often use the analogy ourselves. Where would you take a restaurant recommendation from someone if they hadn’t been to the restaurant themselves? You know, if I said you must go to such restaurant, you say, what would you recommend there? Well, I haven’t actually been there myself. You’re going to think, Oh, why should I? So if you’re an advisor telling your clients they need IP and you don’t have it yourself, then really you know what’s going on,
Speaker 1
yeah. Exactly what’s going on, yeah. So
Jo Miller
just some final points, then on the on the profile of an IP customer report, we did look at added value services as well, and what were the most sought after services. It’s probably no surprise here, particularly to you as an advisor, but the health and wellbeing support. Support, so your digital GPS and your mental health support really popular, return to work assistance and career break options were also up there as well. But what was interesting was there was a gap in consumer awareness, so 86% of insurers believed that customers understood these benefits, and 51% of customers were unaware of them. So, you know, there’s, there’s still a huge education piece there. But I mean, overall the report, we found that the key headlines are, who are underserved markets are so women, obviously we’ve touched on people over 45 and also non homeowners. So those sort of millennial and Gen Z customers are renting, they’re not buying homes, and we’re often marketing IP towards homeowners. So that’s something for us to think about, and a good opportunity for us. Absolutely,
Kathryn Knowles
I was gonna say, I think as well, because it’s all, like we always say, as well. You know, it’s encouraging people to take something that they’re going to be paying for, that, obviously, you’ve got the value of the benefits, but the actual car product itself, we hope they never, ever going to claim on it. So asking people to pay for something that we hope they’ll never claim on, which is really hard to do in the first instance, and then you’ve got the fact, you know, if people are renting, so many people are renting, are trying desperately to save, to then cut in, to be able to get a mortgage and deposit. So when someone’s desperately doing that, and you’re then saying, but can you part with some of that money you’re trying to save? Yeah, it’s really, really hard to encourage people. I mean, it’s, it’s great to see, though, that some insurance are obviously really working in this space and trying to zoom on I know we’ll, we’ll chat about that a little bit later, but we’re just going to obviously go on a bit of a, again, a side tangent. I do like them, so we’ve done the profile of the IP customer report, but then we’ve also got, I think it’s so incredibly important that always remind people about the seven families campaign. So that was where we had a load of insurers giving, you know, seven families access, in a sense, to IP like, in a sense, funds and all the extras, the value adds that we would get for 12 months to sort of really show the reality of this is what income protection can do. You know, these families didn’t have income protection in place. They obviously had situations which were very, very difficult and hadn’t been able to work. And obviously, we’ve got the videos of those brilliant hours to refer back to, and, and now we have the seven claims as well. So what’s what’s going with seven claims? What should advisors be looking and, and obviously consumers as well? What, what should we be looking
Jo Miller
out for? Yes, so we love the number seven. So the seven seven claims campaign is an initiative that’s been led by Phil Deacon, so former head of claims at guardian and a great pedigree before that as well. And really the initiative is aiming to shine a light on the income protection claims process and provide us as an industry with a clear road map for improving every aspect of that process. So it’s a collaboration, a collaborative project. We want to share insights and educate advisors and and the rest of the industry on what actions we can take to improve the process, to improve payout rates, to help improve customer perceptions, help reduce misrepresentation. We know as we sell more IP that’s going to be a concern for our members, and look at ways that we can, you know, reduce processing costs without affecting the service. So we are looking to draw on real world examples and the expertise of claims experts within our iptf members to try and understand what or a supportive and seamless claims journey for consumers looks like. So we’ve released story one, and that really sought to highlight the roles that advisors can play in that claims process and assisting a client. In this particular story, the client was vulnerable in the sense that they didn’t speak English as their first language, so they needed the advisors assistance all throughout the whole process. And you know that the insurer was relying then for on the on the advisor as well, in in helping that run smoothly. So it really does highlight how we need to work together at this point where our customer is already vulnerable, because they’re claiming that they may have other vulnerabilities as well. So that story one that’s out already, you can see the video on our website and YouTube channel, but we’re looking then other stories will come out throughout the year. The ones that are coming up, I know the next one in particular will look at vocab Alan. At vocational rehabilitation and the role that we can play in getting people back to work and using those added value services that we’ve already mentioned. But we’ll be also looking at things like misrep and financial claims assessments, that kind of thing throughout the different stories that come out, they’ll all be approaching the subject from a slightly different angle, with the aim that we all learn something to help improve the process. Absolutely, I was gonna say
Kathryn Knowles
there’s a few things that you mentioned there. I’ve made some little notes coming to make sure they’ve come back and them all and everything. So I think that’s so important. So from like an advisor point of view as we say, what you’re saying about the vulnerability of the English isn’t your first language. That is some things people always say, Oh, how can you identify vulnerable customers and things like that, you would as an advisor, really, in almost all cases, if somebody’s English wasn’t their first language, you would be potentially considering them as vulnerable. You might need to have somebody with them, like a family member or very close friend who can help if you are their advisor and you speak their language even better, you know, because then you can, and I know some firms are actually taking steps when they do have advisors that are bilingual, of actually translating their key features, documents, terms and conditions, which is absolutely phenomenal. Yeah. Great. Absolutely fantastic. So there are certain things, though, that you know when we’re looking at these policies, and sometimes the little quirk, sometimes the extra things that is very, very hard from an advisor point of view, if someone doesn’t have English as their first language to make sure that they’ve understood it, I know we’re going to chat about some products coming up, which that where that’s really, really a key area, and then just Why you saying that in terms of other things, in terms of, like, smooth claims process and things like that, I think there are a couple of things that, you know, we can do as advisors. I’m just thinking mentally. Of another bit is to make sure that people understand, you know, if somebody is going to be in receipt of a long term income protection claim, then it’s, it’s important to sort of like, be clear from the beginning, then you know that could potentially affect their access to some state benefits as well. Yeah, because, you know, I’ve certainly had it with it’s very rare, but I’ve definitely had it at times where people have gone, well, why would I pay for that if it’s going to reduce my state benefits, and you kind of like because this is guaranteed, and this is going to still cover you for far more than what the state benefits will state finance can change. This won’t change, but that can be very confusing for people, and you just don’t want to have that if there is a claim, there’s going to be an unpleasant situation for that person, clearly going through something bad with their health. So the last thing we want to do is be any confusion there and then in terms of SO and another thing is, I remember, obviously, very much with Johnny Timpson in terms of the building resilient households. You know, there is this kind of agreement, in a sense, it’s, I don’t think it’s set in stone, but there’s this agreement that says that basically, if an income protection policy has been arranged to protect impart a mortgage, yeah, that that basically, when people are being assessed for benefits, that they will ignore the income that would be covering the mortgage. So somebody has a mortgage that they need to pay 1100 pound a month well, and let’s say, maybe get a 1500 pounds income protection policy. Well, there is the potential that 1100 pound will be ignored in terms of ongoing income because of the fact we set the mortgage. So what we do at Cure, as an example, is we have specific statements in our recommendation reports to say we have set this up specifically for your mortgage, you know, and to help towards that, as well as other, just general expenses. So really helps if there is a claim in terms of those long term benefits. So do consider people, you know, have a look at and then the last thing I’m going to tangent over to is just you mentioned there, Joe, about misrepresentations for any, I say, consumers. So basically, if you’re listening to this, to just try and learn a bit more about income protection, you’re not from the protection insurance advice world. You know that could be that. It could be you’re a pensions expert and, you know, sorry, things like that, and you don’t necessarily go into the protection side of things. It could be that you are a member of the public, you could be from a charity, anything like that. So misrepresentation, when it comes to things like income protection and other protection products would be say, like, if you’ve said, you know, and a lot of the time it’s incredibly innocent as well, misrepresent,
Jo Miller
yeah, there are two types, really, there is this sort of accidental misrepresentation, but then there is deliberate misrepresentation as well. Exactly,
Kathryn Knowles
I think there’s, I think there’s some, like, three kind of, like, potential years as a scale, and so, so as an example, let’s say, you know, and obviously the insurers will respond differently depending on the kind of. If it is very much accidental, then it might be that they just continue to do the claim as intended, or it might be that they have to tweak it slightly. If it was deliberate, then it’s quite likely that the insurer wouldn’t approve a claim. So just to give an example accidental one, the question set would usually say, Have you had any back pain or joint pain, or this or this, or this or this, and you say no, but actually, three years ago, you’d been to the to the GP, because I don’t know you’d you’ve been playing tennis, and your back of your car suddenly hurt, but it was over and done within two weeks. That could be seen as, you know, potentially an accidental one. It was something you recovered from very, very quickly. You may not even remember the time frames, but it still something that should have been put in the application, yeah, and deliberate would be, you know, a really good example is, you’ve been to the GP, and they’ve said, and, you know, this is, this is more of an extreme example, but they’ve said, right, based upon your symptoms, we think you might we need to send you to a cancer specialist just to rule things out. Yeah? And you take out a policy and say, No, I’ve not been diagnosed with anything. So obviously, at that stage you’ve not been diagnosed. Yeah, but that consultation, the chat with the GP, that will fall somewhere within that question set, so yes, be seen as as more of a deliberate side of things. So, so that’s what misrepresentation means in terms of of these products. Okay, so going on to products, very much. So, so there is another product, and then we’re going to talk about this, and then we’re going to go into some sort of quick fire questions, and I’ve got some a case study to share at the end, which I think will be useful for people, hopefully. So a product that we’re going to chat about which does protect income, but I want to be very, very clear, from an advisor and compliance point of view, that it’s not an income protection policy is what we cast as, ASU, so accident, sickness and unemployment cover. And we were just chatting a little bit beforehand about how this can be such a confusing area for clients, for consumers, for advisors. And I’ll probably, again, Joe, you’ll do the chatting, and I’ll do like, a little bit from a Yeah, I automatically go into compliance mode. Is if I was telling my team, right? Don’t say this, don’t say that kind of thing. But to be very, very clear, accident, sickness and employment cover, it isn’t an income protection policy. It sits within General Insurance, just like travel insurance, private medical insurance, things like that. So it is governed by completely different rules, and it must that must be very much at the forefront of everybody’s minds, in the sense of it does change the potential outcomes for clients, and it is really hard to know what to say and turn it as because it’s a case of what it is protecting the income. So it is an income protection policy, but it’s, it’s not an income protection policy. So I tend to sort of like go on the idea of saying it’s an income replacement policy, just so I’m not putting the word protection in there, just so I’m I’m being very clear. It’s not the same thing. Obviously, each firm will probably have their own little technique as to what they would do with that, but obviously your risk warnings and your things that come with that are very, very different. So again, I’ve got a little bit of site engineer, but with an income protection policy, obviously providing key features documents to clients. With an accident sickness policy, we’ve got things like a terms and conditions, but we’ve got what’s known as an IP ID, which would need to go to the client, which, again, is a requirement because of the facts in general insurance. So so I know Joe that there’s ASU is this kind of is sitting there a little bit where you say, in terms of, like, possibly with underserved markets, it might, might have a place there. Again, need to be very, very careful, because obviously we do need to make sure, potentially, advice is being done and stuff like that. But what’s the iptf wanting to, sort of, like, get out there in terms of a message to advisers to consumers about accident, sickness and unemployment cover,
Jo Miller
yes, so this is the first year that we’ve really looked at ASU. And to be very clear, everything you’ve just said, Kathryn is what we know as an industry. We know it’s regulated differently. We know that there are different rules around it when we’re talking to customers. What I guess we’re trying to do at iptf is come at this from the customer’s perspective. So we know that we have, you know, life IP kick, that they’re all protection products, and that ASU sits outside that. But I think this is about coming in it, as I said, from the customer’s perspective. So when they are searching online, or when they are starting a conversation with an advisor, they’re not seeking out a particular product. Rarely, maybe someone comes to you and says, I specifically wanted to speak about income protection or family sometimes happens, yeah, but I think on the whole, what they’re doing is coming to you to meet a need. So namely, in this case, they’re worried about, you know, what happens to their income if they can’t work? They have an accident, or they’re ill for a long time, or they lose their job, so they’re coming at it from their need, and it’s it’s really thinking about when they do that, what are the things that they could use to meet that need? And of course, we’re the income protection task force, so income protection is obviously one of those things, but the truth is that there are a group of people who are going to find it very hard in the existing market to get any form of IP. Vicky often uses herself as an example. But for those types of people, they still have a need. You know, they still might break their leg and not be able to work. And so we have a responsibility, as we see it, to do what we can, and ASU can often play a role here for those people. So we’ve identified, from speaking to advisors that many often don’t know anything, or they know something. They know it’s there, but they’re not or not. I mean, not all networks have ASU providers on their panel, so it isn’t, isn’t sold by everyone. It isn’t an option for everyone. But there are advisors who know about it. They just don’t know where to find out more. So that’s what that’s why we’re looking at it, because we think there’s a role that we can play to try and provide some educational resource around you know what? What essentially is not an income. It’s not protecting your income, it’s replacing your income, as you say, but it’s for the customer. It’s doing what they were looking for. So we are going to be producing a series of articles and a webinar on this, just to start that thought process, to show people, if they want to find out more what, where they can start, and sort of find out that what they need. I think that’s
Kathryn Knowles
really good, because, as you say, there are, you know, especially, I think you were saying about people not being able to get your traditional full income protection policies, it’s, it’s quite likely that there’s a risk. There often a health risk. And it could be to do with travel, it could be to do with sports, things like that. And you know, there are times that an accident sickness policy absolutely is going to do what we need it to do. And for people who aren’t familiar with it, what you do need to know is that they are, they are non medically underwritten at point of application, but are medically underwritten at points of claim. Um, so, you know, it’s generally, we will be saying there was a pre existing condition exclusion. And, you know, there is, there’s quite a lot, and a broad kind of understanding with that. You do also need to be careful sometimes in terms of travel, in terms of how long you’re in the UK, outside the UK, stuff like that. Again, sometimes careful with sports and things as well. So, and I think, you know, because we at Cura, we do accident and sickness cover for people as well. And, you know, we’ve, kind of, like, we’ve developed this, almost like a cheat sheet, spreadsheet to sort of like, say to ourselves, you know, because there are things like, there’s maximum monthly benefits that can be taken out. There’s certain things of depending upon if you’re maybe a managing director of a company, whether or not you can have it or not. So many different things that make different policies and products and insurers work in different ways and but it is really, really good. And what I would say is that we, we kind of have the approach where we don’t like somebody to walk away from us without having had some kind of income, you know, protection or income replacement policy put in front of them to consider. I mean, you have some people who are just absolutely, I am just not doing this, or it might be that they’re in a situation where they can’t do it because they’re not working or they’re tired. So, you know, I mean, obviously that thing to consider. But if you, if you’ve looked at income protection, you’ve exhausted all options there, especially, you know, looking at accident, sickness cover, you know, it’s, it’s usually pretty easy to set up. But what I would say as well, because we say we need to have the IP ID document, which is brilliant, because it will be like, there’ll be green tick boxes that say we do cover this. They’ll then be like, an orange one that’s like, a bit of a this is a bit grayish. And then there’ll be the red that says, Absolutely not. You can’t claim for this. We won’t cover you if you’re in any of these situations. So it’s really, really good. But what I would say, again, like we were saying before, about language barriers, things like that. You know the it you really want to make sure that somebody is understanding exactly what they’re signing up for with the
Jo Miller
Absolutely, absolutely. Yeah, knowledge is power,
Kathryn Knowles
absolutely. So quick, five questions. Then, okay, yes. So if you could summarize in, I don’t know, a few words or something, I thought, if that’s possible, but what are the good things in the income protection world right now?
Jo Miller
Right? So obviously I need to say record growth in IP policies. I’ve mentioned it earlier, so products getting the attention it deserves. I think you’ve you’ve said the narrative around advisors seems to be changing. There’s more people talking about i. First, which is fantastic. We’re also now seeing providers developing and reviewing their IP propositions, which is fabulous. Because as part of that, we are seeing some of them considering those underserved markets and areas that are trickier mental health underwriting, etc. Amy, seeing some progress in that. That’s brilliant. And I guess, of course, a plug for the iptf. Loads of stuff going on there. So lots of activity, fantastic.
Kathryn Knowles
And if you had a magic wand and could change something about the income protection world right now, what would be the thing you would like to change?
Jo Miller
So I’ve also got lots to say summarize it, but I mean, record sales is not enough, right? And I think we’ve got a long way to go in terms of product development. If I were to sum it up in one word, it would be flexibility. I think our products needs to be more flexible to try and keep up with where modern lifestyles are now. So things like career breaks, income fluctuations. You know, we’ve got 52% of people don’t have a stable income. Products don’t necessarily reflect that. We’ve got maternity leave, paternity leave, all sorts of career breaks that people now expect as part of their career path. So it would be great if our products could catch up with the way that we are living our lives now, and that it wasn’t as hard for advisors to make the existing product set work for what they’re seeing with their customer base.
Kathryn Knowles
Absolutely, I was going to say I have some magic wands things. I’ve got two, yes, I think, and they will not be popular, I think, with anyone, from any angle. So it would be popular with me, but kind of, and I’m going to put this out there, and I’m just picturing different people I know in whether or not they’re in an insurance advisor or different things, and just the cringe if they hear it, but mandatory group income protection, like we’ve had mandatory auto enrollment on pensions. Yep, I’m thinking mandatory group income protection. I’d be hugely unpopular, obviously, with so many businesses. But then pressures being taken off the NHS, things like that, people know that they’re being secure. And I just think it could be something that’s probably definitely not going to happen. However, I think it would be a really, really big positive as a overall, for society as well. So I’m trying to think of not just thinking insurance, but I’m thinking all of us and because as well. In terms of the group income protection, one of the great things about group income protection is people being covered by those policies, often covering pre existing conditions as well. So we’re not just having people not being able to get the cover. It’s, you know, and people, and obviously having some people where it’s just with their health, they just simply cannot get the insurance for number of different underwriting reasons. But that doesn’t mean that they’re not working. It’s just, yeah, obviously, in terms of statistics and things like that, and there’s potential for them to get the cover and also be covered for that condition, which is, is phenomenal for, obviously, for lots of, lots of people. And then my other one that I’d come up with, and I don’t know where this came with so I say I came up with it. It came up in my mind. It’s a memory from speaking to someone about something. So if we can’t do the group IP, there are some things somewhere. I don’t know if this happens in another country, and that’s where I’ve got it from, where on pay slips, there’s a section on it that says, if you, if you’re ill and unable to work, statutory sick pay for you is going to be this, to live off this. It’s sort of like to kind of really trigger people to think, ah, you know, that’s what I’d need to live off. You know, this is what I’m getting. And actually, I’m only going to be getting, like, barely anything compared to that. So because I think people are really surprised at how little it is when you actually say to them, it’s a little over three grand for six and a half months. You know, people just do not think of it that way. And that
Jo Miller
would be really powerful, actually. And as we sit here today waiting for announcements about what’s happening to the welfare state, we know which way it’s going. So wouldn’t it be the responsible thing for all of us that, you know, if the state is going to do less for us, we need a conversation about what you can do for yourself, really, and that needs to be encouraged. If that could be led by government, you know, and it, yeah, that would have such an impact. So, yeah, I’m on I’m on board brilliant.
Kathryn Knowles
I was going to say, I’m happy to have a good debate with anybody from anywhere about it. And the last question is, if you could build an IP product from scratch without thinking about underwriting maximum percentages or anything else that kind of sits on deferred periods or anything like. Fast, that magical word of deferred periods. And what would you do if you just, if you were, like, setting a brand new company, brand new products, what would you like it to look like?
Jo Miller
Wow, that is a big question. Yeah. So I think, I think, going back to my the answer the last question, really, it’s all about the flexibility. For me, it’s got to be a product, ideally, that people take out when they’re as young as possible, so so that they’re as healthy as possible for as many people, but that that can be flexible enough to stay with them through their their working lives. So, as I said, people, people don’t have linear careers, they don’t have stable incomes. We’ve got to be more flexible on that, I think so. That’s not really a big answer to your question, because there’s a lot of work and a lot of questions around that, but that’s my main bug bear. I think of the challenge I think we’ve got ahead of us is that new generation of consumers, you’ve got things like the the three exclusions and you’re out. I think we have to be a little bit more pragmatic about, you know, how that works. Those exclusions
Kathryn Knowles
are because, yes, you know, sometimes you just like, oh, come, you know, suddenly be it could be two health things and then a sport. But sport isn’t really, you know, it’s maybe going to have like, one CEO or something, and you just, oh, really, yeah, completely, completely fall out on the
Jo Miller
three. I also think we’ve got that sort of question around mental health. Then our new generation of consumers that are coming through, yes, have a very different approach to mental health, and we have to be ready for that. You know, we have
Kathryn Knowles
to chatting to an underwriter a few years ago, and I was just like, look, you know, a lot of young people now will go to talking therapies just as part and like, someone goes to the gym, they will go and just chat to someone. I was like, what would you do with that? And the time and driver? Was just like, you’re just like, do not bring that to me. I can’t deal with that right now. That is just so, so beyond what we’re at at the moment. I was like, okay, but it is. It’s a huge, huge we treat,
Jo Miller
we treat mental and physical health quite differently, and I think that’s a historic thing. So we understand it, but it’s not going to be clear why we do it that way. For new consumers, they’re not going to understand. And essentially, I think they use language. I know Vicki was speaking at an event with Alan last week, and they were talking about how younger people are far more likely to use the word anxious or say they have anxiety, where we might say we were nervous or a little bit worried about something, is just different parlance, but in insurance terms, that has implications. You know, saying that you’re worried about something as opposed to saying you’re anxious about something, the implications are very different. So we’re not quite set up for that, I don’t think, but we’re going to need to be so exactly where we’re
Kathryn Knowles
talking about the misrepresentations, though, isn’t it? Especially like the innocent side of things is a case of, what are the insurers asking versus what do consumers What’s that? You know, you said that terminology in society and that openness as well. Because, like we’ve said lots of us and plenty of times, being anxious is a normal human reaction to many different situations. And it’s, it’s kind of like, then it sort of thing. So do you want to do the insurers want to know about every aspect of it, or is it an anxiety that has prevented what it would be clusters? I’m going to do bunny ears here, normal day to day activities. You know, it’s and it’s and it’s just trying, I think, to define that a bit better. And I, I certainly don’t envy the underwriters or anybody who would be involved in making that decision, because I think it’s, it’s going to be an incredibly hard thing to sort of adapt to the the new generation, based upon the way that everything works so far?
Jo Miller
Yeah. I mean, the truth of it is, if you ask any of us if we’ve been anxious in the last five years, any of us that said we weren’t anxious during the pandemic at some point that these shows
Kathryn Knowles
really want to know about because of, like, I think me and Andrew said it on one of the podcast ones, you know, early episodes that we did, we’re just like, there, if anyone can say no, right at this moment, then, then that’s a very unique position to be in, you know. And we naturally all were, you know, it was a very, very unusual situation. And, and, and, yeah, so completely with you on that one, right? I have a case study to finish off on, and I was potentially gonna do some exec IP, but I’m conscious that I’ve gone on a few tangents already. So if anyone wants to know but know about exec IP, there is a specific episode of them previously. So do listen back to that. But I think this case study is good because of the fact that we are talking about one of the young ones. And. Have to say, Joe, I had something the other day, and for everybody to hear this as well, and it’s absolutely floored me. We had somebody join our company at the beginning of January, and I found out last night, and I’m I’m not recovered from this, that her mum is younger than me, and I’m not, I’m not set to cope with that at this moment. And first of all, it was coping with the fact that she was born after the 2000s I could handle that. It stung, but I could handle it. But then when I found out her mom is a year younger than me, I was just like, right? That’s it. I’m out. I’m
Jo Miller
feeling your pain on that one. Yeah,
Kathryn Knowles
we’ve got a young one who’s in her late 20s, and I’m just like, oh my god, I can’t believe I’m saying a young one in late 20s. But anyway, so we’ve got somebody non smoker, and what was interesting is that she’s a bow step. So we’ve got very much a fluctuating income. They’re self employed, which is obviously a consideration in terms of some of the income protections and how the claims would work, and very much so that is the case for barristers on the basis that their income comes in drip over time. So they might stop being able to work because they’re not well, but they might actually still get residual cases being paid to them for the next 12 to 18 months, potentially. And that is something that’s really, really important because of the fact that, and there was a reason I was going to talk a little bit about the exec IP as well, is just to be super careful on that with your deferred periods and what you’re explaining to people on the basis that it’s all to do, the claim is all to do with you being financially worse off. So for this person, obviously, generally, with a lot of people, we want that income protection kicking in as soon as possible, as short a deferred period as possible, depending upon their sick pay. But obviously, she’s self employed, so my immediate thought is self employed. I want, like, a four week deferred period. I want this kicking in as soon as possible, but I couldn’t do that for her because of the base it’s like, well, she’s absolutely for at least the next six months, going to get this follow on income, so a claim wouldn’t be possible, and if I do a short deferred period, she’s just gonna be paying more for something she can’t claim on. So we sat together and obviously had a really, really good chat. It was very much a case of like, How long will you be financially secure, you know, if you are ill and unable to work? And it was like, at least six months. You know, at the very least six months. Okay, so what about 12 months? Because obviously, deferred periods. We’ve got six months jump up to 12 month. 12 month, well, I will have started to reduce what I’m getting at that point. So you know, it will from the six to 12 months. It will start to dwindle. Okay, right? So, went through lots of options and everything, and it ended up that we did £5000 a month income protection benefit that was much lower than what she was able to access. But she was just like, well, at the moment, I have to pay to travel to here. I need to do this. I need to network. I need to go and all this. And she goes. So if I take all that out, and if I give myself my expenses, and then a bit extra 5000 probably does cover what I need. So it’s like, that’s fine, and we went for a six month deferred period. But I would say it’s from an advisor point of view, and obviously from what I explained. So it was very, very clear to say, right? So from six months, you can potentially claim, however, if your income hasn’t dropped enough, then it might not pay straight away, or you might get a portion of the claim. And so it was a choice of giving the option of, well, this is how much it cost for six months. It’s how much it costs for 12 month. Giving those two options being very clear about how it might affect the claim. And she ultimately went for the six month option. She was just like, look, I might not be able to do it, you know, completely. However, she was on a very, very good income, as I say, 5000 was just a portion of what she was allowed to get in terms of income protection. And for her, it was £57 a month, and to do it at six months. So in terms of her income, things like that, that wasn’t an unreasonable premium. She was very comfortable paying that. And just what I wanted to share is just that thing of be so careful. I have, I don’t think I’ve spoken about this on a podcast yet, but I did have someone brought to me who had been done an executive income protection policy through another advisor. And they weren’t the claim wasn’t proceeding, and I was, and this person had been diagnosed with a very, particularly not okay cancer. And obviously no cancer is nice, but this was particularly unpleasant, especially in terms of treatment and things like that. And unfortunately, when they had been done the policy, and they had been done a 26 month, 26 month, 26 week deferred period, and not had to explain to them that they couldn’t keep taking their drawings. Yeah, and the problem is, we were then six months down the line, they’ve still been taking their drawings, their income. And it was a case. Serve. So what’s the financial loss? That was, ultimately, the insurers query, what is the financial loss? You’re still receiving these funds. You can’t just have double no income. And it hadn’t been explained. And obviously, once I’d explained it, they’d said, but we wouldn’t have taken a 26 week if we’d known this. And so just be so, so careful when you are advising on these things.
Jo Miller
Yeah, it’s a great point, I think, for clients to understand, it’s really important. But accountants as well, accountants often don’t understand. So, yeah, when you’re setting up these policies that that conversation, so that when the worst happens, they they know what to expect or not to expect, is really important. Absolutely,
Kathryn Knowles
you’re completely right on that. I’m always quite surprised actually, at how often, in terms of any business product, there’s often, obviously, I’m advising the client, but there’s quite a lot of time that I’m having to step in and give direction to the accountant as well, which is certainly, you know, as an advisor, you usually expect old accountant will know this, and it often isn’t the case. But what I would say is that insurers, I’ve always found insurers to be absolutely brilliant, and if you need to, if the if you’re not, the accountants just not getting it, you know, speak to a tax specialist at the insurer, and they will often give you the exact wording that’s needed that I’ve had it at times where they’ve offered to even speak to the accountants themselves, you know, just to try and help. So it’s an it’s really, really good. But thank you so much for coming, Joe. It’s been lovely to hear ETF and what’s going on. So thanks very, very much for sharing all that insight
Jo Miller
with us. Thanks for having me. Next time,
Kathryn Knowles
I’m going to be chatting with lead Doran from William Russell, and we’re going to talk about international protection products. If you’d like to listen to more, please visit the website practicalhydrprotection.co.uk, and don’t forget, you can access your CPD certificate on the website too. Thanks to our sponsors, the Okta members. Thank you. Joe. Bye, everybody. Bye. Bye.
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Episodes of the Practical Protection Podcast include a transcript of the episode’s audio. The text is the output of AI based transcribing from an audio recording. Although the transcription is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors and should not be treated as an authoritative record.
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