The IFoA believes that income protection insurance can reduce the government’s cost of out of work benefits. Its president, Colin Wilson, said:
“The advantages of income protection products are clear – they provide an effective safety net against unexpected loss of earnings. We believe the government should do more to increase the uptake of these schemes.”
He wants the government to encourage employees and employers to create an auto-enrolment scheme for income protection. This would be similar to pension auto-enrolment where workers are automatically enrolled in a workplace pension scheme. Employees would be auto enrolled in income protection insurance, but would have the choice of opting out.
The scheme would reduce the cost of state benefits. Wilson said that the money saved could provide extra help for people such as those with long-term health conditions that need extra financial assistance.
Though individuals can take out income protection, not many employers have group insurance. Research by Group Risk Development found that employers see cost as the main reason why they do not offer income protection insurance. Katharine Moxham of Group Risk Development said that businesses should focus more on value than cost. She said:
“Employers that make use of group income protection can’t sing its praises highly enough, and the findings show us that as an industry we need to do more to talk about the great value that group risk financial protection provides.”