The number of short-term income protection (STIP) policies has increased by 120% since 2009, 'outstripping' long-term income protection (IP) sales, research has found.
Defaqto data has shown the number of STIP products on the market has increased from 30 to 66 since 2009, with the volume of IP policies available having fallen by 20% over the same period - from 67 to 54.
However, this represents a combined growth of 24% in product numbers over the last four years.
Defaqto has said despite the growth in STIP, the more "bespoke nature" of IP offers the most scope for advisers to provide value to clients. However, understanding the product landscape will be critical for advisers to reap the benefits.
Ben Heffer, insight analyst for life and protection at Defaqto, said: "Traditional income protection sales are being challenged by the rise of STIP, but advisers have a clear advantage in being able to recommend quality long term products to their clients.
"Simple products, such as those offered by short term income protection insurers, may be easier to buy but advisers can tailor solutions for their clients by drawing on the many features and benefits supplied by the more sophisticated products.
"Advisers should not fear the drive towards simple products in the direct distribution space; anything that helps to change the mind-set of consumers and makes them more disposed towards buying protection has got to be a good thing for the whole industry."
Effective 1 January 2021
Across all age categories
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