The slowing of payment protection insurance (PPI) presents a significant opportunity for financial advisers to write policies that cover not just loan repayments, but also a percentage of income as well and to focus on addressing clients' wider protection needs, Defaqto has said.
A strong case for income protection insurance, is a theme of Defaqto's latest Insight Paper 'Opportunities in Protection Post-PPI'.
Ben Heffer, Defaqto's Insight Analyst for Life and Protection, said: "Research suggests that much of the population may have no protection for their borrowings and lifestyle expenses, which could leave them in serious financial difficulty if they couldn't work.
"Therefore, the point of sale prohibition of PPI actually presents real opportunities for advisers to capitalise in the income protection market.
"Upgrading clients' PPI coverage from just their mortgages or loan payments to include their income is an avenue worth exploring. Furthermore, upgrading cover to a permanent long-term income protection policy also establishes a firm foundation for the rest of their financial planning.
"In addition, recommending income protection to clients can also protect the adviser's own business - if clients' incomes are protected, in the event of sickness or disability, they may be able to afford to continue with the financial plan the adviser has arranged for them."
Defaqto's paper examines the reasons for recommending a long-term income protection product and how advisers might take advantage of the opportunities presented by the fall-out from PPI, including:
• Analysis of the Competition Commission's findings and remedies
• Maximising the opportunities available for income protection insurance
• Positioning income protection insurance with the major objections to sale
• Examining other protection opportunities
Advisers can download Defaqto's latest paper, free of charge, from its website.
