F&TRC's Kirsty Tanner asks whether advisers should be doing more to ensure the value and quality of supplementary benefits in income protection (IP.)
The variety of benefits offered across income protection policies, is seemingly ever changing and evolving.
However, whether they come in the form of proportionate benefits or counselling services, they are all designed with a view to support the claimant throughout their illness or injury, and most importantly, to ensure they return to work as quickly as possible.
Could more, therefore, be done to assist advisers and paraplanners to research these benefits more effectively?
The type of ancillary benefits offered can vary widely from provider to provider.
The type of ancillary benefits offered can vary widely from provider to provider. For example, some will offer extra payments to help with specialist care, while others offer 'back to work' benefits paying a percentage of the sum assured if the illness or injury leaves the individual unable to earn the same level of income.
There are even providers who effectively incentivise claimants by offering a cash lump sum upon their return to work. Whatever form they take, having access to these types of benefits can be extremely beneficial in helping the claimant get back on their feet.
Outweighing the costs
In one case study recently carried out by Claims Management Services (CMS), they cited the case of Catherine, who was due to be off work for three months following a kidney transplant.
However, Catherine's recovery was slower than expected and although concerned about potential damage to her career, she didn't immediately feel able to return to work on a full time basis.
Catherine, who felt unable to communicate this directly to her employer, shared her concerns with a CMS rehabilitation consultant.
The consultant agreed to liaise with the employer and together they created a plan for Catherine to initially return on a part-time basis. The consultant stayed in touch with Catherine and her employer to ensure the plan was being kept to.
This led to Catherine successfully returning to work on a full time basis within the following few months.
As highlighted in the above case study, the potential advantages of these benefits should not be overlooked. The difference in cost between this type of benefit being offered or not could be as little as a few pounds per month. With such a small cost differential, the argument for paying the extra becomes more compelling.
Despite the persuasive arguments, there are significant problems associated with attempting this type of research.
In order to gain a full understanding of benefits being offered, the researcher normally has to refer to the key features and/or T&Cs documents – some of which are in excess of 20 pages.
Repeating this process with several different providers, as well as collating the results to form part of the research is a time consuming process.
It is easy to see how the associated costs could quickly spiral. A further problem exists in that there appears to be little uniformity in the benefits offered. The researcher has to decipher which provider offers what benefits, and the nature of the benefits offered.
So is there a realistic solution that can help paraplanners and advisers alike? We now live in a world where comparison sites are common place. However, most traditional sites are only designed to give a basic comparison.
Consequently, if you want to find out the nitty gritty of a particular plan, your only option is to locate and scrutinise the provider websites and product literature.
The chart (above) demonstrates a snapshot of information taken from the 'Return to Work' section of our research tool Quality Analyser. It shows that of the 15 propositions included, ten providers will continue to pay claims through a period of retraining, while all providers offer some level of proportionate benefit under the scenarios mentioned.
The potential long term advantages of these benefits should not be under-estimated. Giving the claimant the right support to help them get back into work, even if on a reduced basis, is surely just as important as the claim being paid in the first place.
With the focus also shifting to benefits that are designed to prevent employees going off sick in the first place, such as health assessment tools and 24-hour counselling services, it could be unwise to dismiss these as merely attractive accessories to otherwise basic income protection.
While cost may remain the driving force behind their recommendation for some advisers, with continued pressure on the financial services industry to ensure quality of advice, the value of supplementary benefits should not be down played.
Kirsty Tanner is a research consultant at F&TRC
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