It has been positive to see an overall increased awareness of the benefits of income protection (IP), with an upward trend in sales in recent years.
However, I have been reflecting on limited IP claim terms and what this means for customers who may not recover sufficiently and may remain out of work at the end of a two-year or five-year claim term.
The impact is most significant for customers with a two-year claim term.
For severe illnesses or catastrophic injuries, the recovery timeframe may extend beyond two years, and sadly, in some cases, a full recovery may not be possible.
However, the majority of sickness absence is related to common health conditions, such as musculoskeletal and common mental health disorders (CMHD), with a positive outlook on recovery and return to work, at least in theory.
Yet, the evolving health risk landscape presents challenges.
Younger claimants
A report by the Health Foundation indicates that mental health trends among the UK working population are deteriorating, especially for individuals aged 16-34.
Will the age demographic at claim stage change, or is it already changing, with younger customers dropping out of work with CMMD.
Many challenges can compromise recovery timeframes, including timely access to treatment for common health conditions via the NHS, which is often a barrier.
Additionally, return to work aspects are not generally covered in medical interventions. Thus, many customers remain out of work despite treatment.
And of course, individual psychosocial circumstances also play a key role.
Self-employed customers are particularly vulnerable, lacking access to employer-led support services.
Medical and vocational support
Despite these challenges, insurers have opportunities to support IP customers.
A well-designed early intervention (EI) framework, tailored to the specific IP product and customer profile, is essential.
This framework should be holistic and bespoke, addressing both medical and vocational pathways, to provide a truly personalised experience.
Additionally, ensuring claims teams are equipped with the skills to support customers proactively, with care, empathy, and in a consistent manner, during the claim journey, is as paramount.
For example, in a recent IP case, a customer faced an extended absence, that risked exceeding his two-year IP claim term. He self-funded psychotherapy, and his GP managed his pharmacotherapy.
While his panic attacks and anxiety gradually improved, he totally lost confidence in his workability and was unable to formulate a return-to-work plan.
He was at risk of losing contact with existing clients, as he could not reply to work queries.
However, he was offered vocational rehabilitation support via his IP insurer, returning to work in a graduated manner for a sustained outcome.
The case circumstances suggested that without additional support, his recovery would have possibly extended beyond the two-year claim period, with a continued loss of income.
This could have resulted in a policy lapse due to an inability to continue with premium payments, with a customer possibly losing his protection cover.
Thankfully, this was not the case, and we can be proud that income protection did precisely the right thing for this customer, through bespoke early intervention.
Actions for advisers
There are critical elements for advisers to address in this regard and how they can support their clients.
Advisers must be sure to clarify the terms and conditions of limited IP claim terms to clients, in the context of individual circumstances.
For example, explaining at length the differences between various claim term options, with illustrations of different illness or injury scenarios, where long-term sickness absence, or even permanent work incapacity would be expected.
They should also be evaluating and advising on the additional support services available to customers during the policy term and at the point of claim.
Most IP providers now offer remote GP consultations, access to treatment, and return-to-work support through vocational rehabilitation where required.
Monica Garcia will be speaking about the income protection market at Health & Protection’s Protection Forum event next month. Advisers and intermediaries can register for free passes to attend on the event website.
