Since April 2012, payment protection insurance has not been able to be sold alongside a loan which has created a new standalone market for this and other related products.
However according to Defaqto this presents a significant opportunity for financial advisers to write policies that cover not just loan repayments but also a percentage of income as well – and to focus on addressing clients’ wider protection needs.
Ben Heffer, Defaqto’s insight analyst for life and protection, said:“Research suggests that much of the population may have no protection for their borrowings and lifestyle expenses, which could leave them in serious financial difficulty if they couldn’t work. Therefore, the point of sale prohibition of PPI actually presents real opportunities for advisers to capitalise in the income protection market.
“Upgrading clients’ PPI coverage from just their mortgages or loan payments to include their income is an avenue worth exploring. Furthermore, upgrading cover to a permanent long-term income protection policy also establishes a firm foundation for the rest of their financial planning.
“In addition, recommending income protection to clients can also protect the adviser’s own business – if clients’ incomes are protected, in the event of sickness or disability, they may be able to afford to continue with the financial plan the adviser has arranged for them.”
