Independent financial research company Defaqto offers advice on short-term income protection and long-term income protection. Selecting appropriate income protection products is particularly complicated given the variation that exists between the different options available:
Short-term income protection
- 52% include unemployment cover – 8% include this automatically while the majority offers it as an option
- 44% offer unemployment benefit on a standalone basis
- 53% pay out for just 12 months maximum. The remaining policies offer one or more optional benefit payment terms - 16% offer 18 months and 19% offer 24 months.
Long-term income protection
- 8% have an optional redundancy cover benefit
- 86% pay out for as long as the policyholder is sick or disabled, or until they retire - 20% also offer a limited benefit term option
- 14% are limited benefit term products only.
Given this variation, it is important for customers to be able to understand the features benefits and cover offered by different products.