Research says no surge in sales, despite CI price hikes
Sales of critical illness (CI) cover will continue to surpass income protection (IP) sales, despite increased premiums for CI over the next year, according to research conducted by Liverpool Victoria.
While over half of protection policies sold by IFAs include CI cover, only 23% include IP.
The research indicates this proportional difference is likely to grow over time as a comb-ination of longer life expectancy and improved medical treatment begins to influence financial planning.
'This is despite the fact that increased premiums are likely during 2003, as reinsurers take account of the likelihood of earlier diagnosis within their overall risk,' said Rye Mills, director of the intermediary division at Liverpool Victoria.
Reinsurers have taken a similar viewpoint. Paul Casey, media relations specialist at GE Frankona Re, said: 'I am not surprised by Liverpool Victoria's conclusions and it will continue unless the IFA community makes more of the need to cover income. People prefer the lump sum aspect of critical illness. The public, and to an extent IFAs, see critical illness and income protection as similar, although they serve different needs.'
Protection intermediary, LifeSearch, disagreed, saying IP is perceived as a more complex product. Kevin Carr, senior technical adviser of the firm, said the product could still shine: 'If prices continue rising and guarantees are removed on critical illness and not income protection, then the gap would diminish. Critical illness would still be sold, but there would be an increase in income protection sales.'
Both LifeSearch and Liverpool Victoria note employers offering IP as a group employee benefit also hamper individual sales.
Mills added: 'Although critical illness and income protection are complementary, the latter is lower down the pecking order and will lose out where the increased costs are a consid-eration or where it is covered by the client's employer.'
