Income Protection potential through Welfare Reform Act

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The public is not aware of the repercussions of the welfare reform Act, IFAs have said.

Less than a tenth (8%) of advisers think that their clients have taken out adequate Income Protection (IP), according to Friends Provident research.

Although 68% of advisers are aware of the changes made through the Welfare Reform Act (WRA), their clients are not so savvy.

Almost eight in ten (79%) advisers feel their clients are not even aware that the changes have taken place, while 66% report that most of their clients think it's unlikely they will be off work for six months or more due to illness or accidental injury.

The WRA, which replaced Incapacity Benefit with the Employment Support Allowance (ESA), recently celebrated its first anniversary as the Government aims to reduce those who are eligible for ESA by 1 million.

They hope to do this by implementing more stringent criteria for claiming, and encouraging potential claimants back into work.

Only 28% of advisers believe that the State would be able to provide their clients enough money for them to live on via ESA. Despite this clear opportunity for Income Protection, 89% of advisers who sell IP admit that they have not used the changes in the Welfare Reform Act as a tool to boost sales.

Ed Stuart-Brown, head of protection sales at Friends Provident said: "People need to take responsibility to protect themselves from the financial hardship of an illness or injury by ensuring they have adequate Income Protection.

"They need to switch on to the fact that the State is unlikely to meet their needs should the worst happen. We are encouraging people to think about the consequences of not having adequate provision."

 

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