Zurich recently wrote to the Chancellor asking for the introduction of tax rebates on income protection. If implemented, would rebates boost income protection take-up?
Emma Thomson, Lifesearch
LifeSearch fully supports Zurich's push for a tax rebate to be introduced for income
protection plans.
It makes sense for all parties concerned and it would give the protection industry a much-needed boost, as well as helping more families to properly protect their incomes.
Income protection (IP) is arguably the most important protection product for most families, yet it is often treated as a poor relation of other products - not just by consumers, but also by the industry itself. This is due to a range of factors, including a lack of access and promotion, perceived complexities, the payment protection insurance (PPI) scandal and more.
Anything the government can do to encourage take-up of protection is to be encouraged; LifeSearch has called for government to take action for many years, and it's good that a major insurer is supporting this too.
It is not just tax breaks we need, though - the whole area of sales and marketing, as well as the overall process for writing IP business, also needs to improve. If the government introduces tax relief and sales quadruple overnight, the industry needs to be ready to cope with the increase in demand, which means we need much slicker processes.
Government should also do more to encourage self-reliance by not means-testing monies received through insurance policies.
And, of course, it would be great to see some proper advertising for income protection.
Mark Jones, LV =
The introduction of tax rebates for IP would be a positive step for the reason that it would draw greater awareness of the products and of how people can protect their income.
But would an IP tax rebate on its own encourage greater take-up? I don't think so.
With this tax incentive idea, I don't believe affordability is a big factor in the poor consumer take-up of IP. And I wouldn't want anyone to think it is all about price.
Instead, awareness and confidence are the two biggest barriers to people protecting their income. Anything that encourages consumers to consider IP and informs choice is likely to encourage take-up of policies.
If tax incentives encourage individuals to speak to advisers about IP, that can only be a good thing. However, it needs to be clear. I can certainly understand if advisers want to speak to clients about tax rebates.
What has been positive is Zurich's quid pro quo approach to the government. It's good to see an economic argument put forward.
However, it is still incumbent on the industry and advisers to share materials and engage awareness. I don't know if there is a single silver bullet that would encourage people to take up IP - but if many more people hear the message and if more people seek advice, that will be a good thing for the industry.
