Greater flexibility in product design is key to future proofing protection which could lead to annually renewable premiums and the ability to vary payments.
Katie Crook-Davies, co-chairwoman of the Income Protection Task Force (IPTF) and co-founder and managing director of Tabei, noted guaranteed insurability options (GIOs) can help, but they remain quite restrictive and can only be used a certain number of times.
Addressing delegates at the Protection Review’s ProtectX6 event, Crook-Davies (pictured) argued it was all about giving customers the ability to adjust and flex their cover over time through different life stages.
“That could be increasing or decreasing their sum assured, changing their term of cover, moving from a fixed lump sum payout to an income payout all easily. It needs to be done simply,” Crook-Davies said.
“And this would probably require some changes to the way that we price these products.
“It might be that we would have to move to annually reviewable pricing and premiums and yes, that would likely incur some additional administration expenses and some complexity.
“But perhaps these things are worth it if we’re seeing a better customer experience, improved persistence and ultimately a better customer outcome.
“Flexibility is the future. Let’s adapt. Let’s create products that flex as our customers’ needs flex and let’s deliver protection solutions that can stay with our customers for life.”
Real life experience
To illustrate her points, Crook-Davies told delegates about her own family’s experience with protection.
She asked whether today’s protection solutions are meeting the needs of people like her sister who represent today’s consumers – someone whose career will change over time and may move between rented accommodation and home ownership within her life.
When her sister sold her property she lapsed her protection as she saw it as somehow linked to her mortgage.
Touching on her own experience, Crook-Davies revealed she did not take out income protection when she bought her first property as she was employed and had the financial support of an employer.
So she opted for life and critical illness cover and had two options – a plan with GIOs and a plan without.
Six years on with a larger house and expecting a family, when reviewing the protection her adviser discovered she had not taken out the GIOs which could have allowed her to adjust her cover for the new financial reality.
Consequently, Crook-Davies hoted she has had to take out new cover but has been diagnosed with coeliac disease which has also meant she has struggled to secure income protection cover.