Income protection, which pays a regular income in the event of policyholders being unable to work due to long-term sickness or disability, has struggled to fulfil its sales potential in the eyes of British Insurance as a result of being too complex for consumers to understand and too time-consuming for intermediaries to sell.
Standard income protection policyholders can be charged different premium rates according to factors such as their age, occupation, smoking habits and sex. They can also have to wait several weeks for the underwriting process to be completed before their cover starts.
Safetyfirst charges everyone the same flat rate of £5 a month per £100 of monthly cover. Policies are arranged instantly, although around 10 per cent of applicants are declined on the basis of their answers to a very brief medical questionnaire.
The approach is similar to that used for payment protection insurance, but the difference is Safetyfirst will pay out for up to 30 years – whereas payment protection typically pays out for a maximum of one year.
Simon Burgess, managing director of British Insurance Limited, said: “Even ardent supporters of standard income protection acknowledge that it could benefit from being as simple as payment protection, and this approach gives the best of both worlds.
“The new Income Protection Task Force and the ABI Protection Committee, which are both trying to devise a product formula to boost income protection sales, should find that I have already provided most of the answers.”
