The government is cutting welfare budgets with a change in focus on disability benefits. As a result many people currently unemployed through sickness or disability could find themselves in a tough situation. How would I position my business to take this opportunity to promote (group) income protection while remaining sensitive to the issue?
Roy McLoughlin, Master Adviser
The last couple of years have seen a sea change in the message the government has been conveying in terms of disability benefits. Every time one hears Ian Duncan Smith, I always think the message in terms of people looking at their own IP is loud and clear.
Claiming state benefits will be harder than ever. Even if you can claim them the amounts will be inadequate to live on.
This provides an undoubted opportunity for advisers. When a subject is on the front page of most broadsheets and on TV, it is a far easier discussion to facilitate with clients.
The move away from the welfare system will result in people initially looking towards their employer as a safety net in view of long term illness. We know that just under 10% of employers have any form of GIP so this opportunity is massive.
It is also very much in the interest of a HR department to be able to look after people who are off long term ill but equally send a message out that if this were to happen then staff have nothing to worry about.
Ask any HR professional the cost of recruitment and when you put this alongside the cost of replacement the premium on a GIP policy suddenly becomes very good value for money. The adviser's opportunity is therefore to go and talk this story through with as many corporate clients as well as individuals who hold senior positions in these types of companies.
Katharine Moxham, GRID
I don't think the two are mutually exclusive. Employers may or may not be aware what is happening in terms of the state pulling back. Or they may find perhaps someone who in the past has gone off indefinitely on the old style incapacity benefit might come back and say, I'm now being expected to work clinically, help me out here.
The thing with GIP is it really does avoid that occurrence. We work extremely hard with employers and those who are off sick to look at ways of getting them reconditioned for work and back into the workplace in a sustainable way.
We as an industry have come to realise how important it is to do that early on in absence. Very often what's keeping the person off is not the condition that took them off in the first place. They may develop anxiety or depression, which could keep them away for work.
It is a huge opportunity for brokers, in that it's a business continuity tool for employers, it provides them with a financial liability.
One thing employers may not be aware of is they get a huge range of support with a GIP, such as an EAP or fast-track access to CBT or physiotherapy or occupational health support. All of these things can be used on a daily basis without anyone making a claim. There are huge opportunities to promote group risk as a business continuity tool and an employee and employer support service at relativity low cost.
Paul Avis, Canada Life
Most employers with a focus on pensions have forgotten the true priority should be protecting the income of employees due to the paucity of state benefits and the hard level of assessments they would have to go through.
People need to protect themselves in the next 26 weeks. not the next 26 years. The state pension will be £140 a week when you get there but state disability will be £50-70 a week. You need protection where you've got the highest level of debt.
If you have someone aged 35-55, they've probably got a mortgage, a car loan, children in school. The money you get from the state will never replace that income.
The state incapacity benefits are also means tested subject to a benefits cap and it's only people with contributory ESA who get support with their mortgage.
The need for income planning is self-evident and for an employer should be a priority benefit purchase.
Large employers will have a corporate social responsibility agenda. For them there is a real benefit in retaining those with disabilities in terms of skills retention and having a workforce representative of the UK.
For the SME, the driving force behind disability is the retention aspect. You probably have a responsibility beyond paying their salary, you've probably built the business with them and if they are reliant on the state benefit, they could descend into poverty.
If an adviser wants to differentiate themselves, they should be talking about employee benefits and value provision.
Peter Le Beau, Le Beau Visage
One of the conundrums we face in expanding the amount of IP we could write is that the benefit is likely to become more appealing as the government's welfare reforms start to bite.
Almost 1 million less people will be on ESA than were on Incapacity Benefit.
This is what the government want to achieve and if public opinion on the matter can be gleaned from recent research it is what the British public want too -- that is until we actually know someone who is sick!
People will struggle really hard in an era when welfare benefits start to be tougher to obtain. But how does the industry react to this situation?
IP has always been the best answer to giving real reassurance to people that if the worst happens they can meet the most important financial needs their families have.
We should not be frightened of proclaiming this message but it would be good if the industry could perhaps look at auto-enrolment as a way to provide disability cover more widely through the workplace.
For the first time in living memory income protection is likely to pay out more readily than government welfare benefits and we face an opportunity where the value of IP might be disseminated more extensively.
Welfare benefits have traditionally been seen as a safety net to ensure the sick can still survive financially. Perhaps in this new era the role of welfare protection might be more significantly shouldered by IP insurers?
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