Short term IP rated by Defaqto

The financial research company said it aimed to help advisers ensure a better match between clients' requirements and the features offered by different protection products.

According to Defaqto's research there are significant differences in the two policy types that bear attention.

Short-term income protection:

• 52% include unemployment cover - 8% include this automatically while the majority offer it as an option
• 44% of policies offer unemployment benefit on a standalone basis
• 53% of policies pay out for just 12 months maximum. The remaining policies offer one or more optional benefit payment terms - 16% offer 18 months and 19% offer 24 months

Long-term income protection

• 8% of income protection products have an optional redundancy cover benefit
• 86% of policies pay out for as long as the policyholder is sick or disabled, or until they retire - 20% of these policies also offer a limited benefit term option
• 14% of policies are limited benefit term products only

Ben Heffer, Defaqto's Insight Analyst for Protection, said: "From an adviser's perspective, they need to consider both short and long term income protection when advising clients on protection - after all, if a client has no income their whole financial plan will be undermined.

"However, due to their inherent complexity, it is often difficult for advisers to engage clients with these products. On the flip side, this presents an opportunity for advisers in terms of being able to help clients understand what products are suitable for their needs.

"Our research shows that long and short term income protection policies offer varying levels of cover, excesses, exclusions and additional features and benefits - so it can be difficult for advisers to navigate the market.