Myriad reasons are to blame for a year-on-year increase in complaints about income protection (IP) products, advisers have told Health & Protection.
These include an over scrutiny of claims from providers, long underwriting times, issues around non-disclosure and product complexity.
But increased awareness and surging sales have also been cited as a key contributory factor to a 22.4% increase year-on-year in complaints to the Financial Ombudsman Service (FOS).
Earlier this month, Health & Protection reported on the latest data from the FOS covering Q3 2025 which showed complaints about income protection have risen 22.4% year-on-year – rising to 246 complaints with 24% upheld, up from 201 new complaints a year earlier.
This is in contrast to high levels of private medical insurance complaints which have started to come down and life and critical illness grievances that have held steady.
Health & Protection spoke to advisers across the protection sector to shed light on the reasons for this increase in complaints.
‘Speculative or premature claims’
Justin Harper, chief marketing officer at LifeSearch, told Health & Protection the firm’s IP complaint volumes, including those escalated to FOS, have remained broadly stable year-on-year, with only a marginal increase.
Harper revealed that while the firm saw only a handful of cases go to the Ombudsman last year, LifeSearch has seen a notable rise in complaints linked specifically to declined claims – around a six-fold increase year on year.
“IP is inherently more complex at claims stage,” Harper continued.
“There are questions around disclosure, what is and isn’t covered, exclusions, and for many clients – particularly the self-employed and those with variable earnings – the financial assessment of earnings.
“It’s also a living benefit, claimed by the policyholder themselves, which can make disputes more ‘emotive’.”
Harper further maintained that a by product of increased IP sales is more claims.
“With IP sales growing strongly across the market, it’s reasonable to expect more early claims and, proportionately, more declines where policies haven’t been fully understood or disclosures haven’t been accurate,” he continued.
“We’ve seen a small number of very early claims ourselves – including one made within 12 hours of cover starting. All our IP sales are advised, but we are experiencing more instances of what appear to be speculative or premature claims.”
Strengthening processes
In response, Harper added that the firm has set about strengthening its processes.
“That includes additional checks around customer intent at point of sale and enhanced post-sale communications to reinforce how income protection works, what’s covered, and what will be assessed at claim stage,” he continues.
“For us, this is about clarity and fairness. Income protection remains a vital insurance product – our IP sales rose by more than 10% last year.
“But understanding at the outset is key to ensuring the right outcomes later. Sadly, though, we are seeing more people ‘try it on’.”
Non-disclosure and underwriting times
Tara Cohen, director and mortgage and protection consultant at The Mortgage Centre Direct, also suggests non-disclosure could be a contributing factor.
“I would have thought the main reason is non disclosure of something on the application,“ she said.
“Then when it comes to claims, there’s something that’s discovered in their medical records that’s not being declared on their application and therefore the insurer doesn’t pay out or reduces the claim and that then causes the client to make a complaint.
“But it’s not the insurer’s fault. I would say that’s the most likely reason.”
A further contributory factor however, Cohen continues, is connected to underwriting times.
“I’m one of the IPTF’s seven advisers and when last I checked in with the other advisers and ambassadors, some of them were commenting that the underwriting times were absolutely ridiculous, so sometimes when there are delays in the process, that can cause complaints,” Cohen adds.
“Because ultimately, as soon as the client has made the decision they want insurance, they want it in place as soon as possible and if it’s taking a month for insurers to even look at the application, that’s not on, is it?”
Deferred periods
According to Naomi Greatorex, managing director at Heath Protection Solutions, advisers need to continuously remind clients what they are covered for.
“Particularly with things like deferred periods, and when people can make a claim, some of it will definitely be understanding exactly what’s within the contract,” Greatorex said.
“Like how many weeks deferred do you have? And if your cover has changed through work for example, and you’ve still got your deferred period within your income protection plan.
“With income protection, there’s different things to consider, whereas with critical illness, it’s on diagnosis, and with life insurance it’s if you’ve died, so it’s very specific.
“Whereas I wonder if people are updating their adviser if they have changed their deferred period or changed occupation because the contract needs to change with you.”
Claims over scrutiny
Joanna Streames, owner of Velvet Mortgage and Insure Services, maintained there has been an increased uptake in IP and more awareness of the product over the past few years.
“Sales have increased and there has been more awareness,” Streames said.
“There are more people taking it out, but there is a problem with claims.”
Over scrutiny of claims from providers is taking its toll, Streames continued.
“There seems to be an over scrutiny from providers to not pay out,“ she said.
“The general feeling is they are looking for ways to not pay income protection.
“We can’t close the gap if insurers are doing that.”
Sales growth
Providing a network perspective, Jo Pawson, head of protection at New Leaf Distribution, emphsised the rise in income protection complaints needed context.
“Since Covid there’s been a clear shift in adviser behaviour and client awareness around protecting income,” Pawson said.
“Industry campaigns such as the Income Protection Task Force and wider conversations about financial resilience have pushed IP up the agenda and as a result IP sales have grown significantly and the market is now likely more than 50% larger than it was five years ago.
“More policies mean more claims which inevitably gives rise to more potential complaints.”
Pawson agreed that IP is also operationally complex.
“Claims are ongoing, definitions can be nuanced, and benefit levels, particularly for the self-employed or directors, may be reassessed at claim stage, creating scope for misunderstanding,“ she continued.
“This underlines the importance of advisers ensuring clients fully understand how their policy works, including any limitations if a full recommendation isn’t taken up.
“Clear expectation-setting at point of sale is critical to reducing disputes and declined claims later on.”