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?
Steve Wanstall, British Friendly
Anything that increases take-up or the exposure of the product itself and how important it is will be worthwhile.
Take-up of IP is still desperately lagging behind the other protection policies. It’s an initiative that needs to be explored. It would be interesting to know the feasibility of something like this without making the product even more complex.
One of the things I often hear is that IP is frequently seen by consumers as being too difficult to understand.
Would a tax rebate be seen as adding to that complexity, or would customers like the idea of having a rebate? If it was done in a way that was easy to understand from a consumer perspective, it’s this kind of thinking that would give the take-up of IP the pace it needs.
I guess at this stage the £50 was an initial marker to say ‘this is the kind of thing we are thinking of doing’. You could argue a £50 rebate would mean a lot more to some than others.
Consumers will think ‘how do I get that back? Is it something I will get back into my bank account, or would I pay less tax?’ You would probably need to back this up with some kind of metrics.
It’s definitely a step in the right direction to engage the consumer at a higher level, and it would become a talking point for people.
Nick Jones, Exeter Family Friendly
There’s no doubt that any tax incentives on IP could potentially prove a big boost for the industry and for take-up of the product.
Given the strain on the welfare system and the fact we’re working for longer, but living for longer in poor health, people need to be encouraged to protect themselves. IP is a key component in helping them do just this but, at present, only one in ten people own this crucial cover.
Two of the major issues holding IP back over recent years have been an almost total lack of awareness and, for those who do know about it, the perception that premiums are too high to really consider buying it. Any tax incentive offered by government would help on both fronts.
However small the gains from any tax incentive, the fact is most of us like to make our income work as smartly as possible so we get the full reward for our pay packet. If this means more people look at IP for the first time, great.
Secondly, any tax incentive could generate an amount of news coverage and media noise that is likely to be taken notice of by a fair proportion of consumers. Over the years we have struggled to take our message to the people – this could prove invaluable in helping us close the awareness gap.
