Insurance that can really make a difference...

THIS time next week, the final curtain will quietly go down on a campaign to promote the virtues of financial protection insurance. No, not nasty payment protection insurance that rarely paid out, but income replacement cover that provides a regular income in the event of serious illness. An insurance that amazingly isn’t riddled with exclusions and surprisingly meets more than 90 per cent of claims (miracles, it seems, do occasionally happen in the world of insurance).

The campaign, Seven Families, was launched in this newspaper in November 2014. Featuring seven families all blighted by a breadwinner falling victim to long-term illness, the idea was to demonstrate the liberating impact of income replacement cover on a family’s finances and outlook – not just in the financial uplift it provides, but all the ancillary support (counselling, for example) that comes with it. For a year, the seven families were given the income they would have received if they had bought cover prior to their disability.

The hope was that the campaign would prompt more people to consider an insurance often overlooked – insurer Swiss Re has calculated that the ‘disability protection gap’ in this country currently stands at a staggering £200billion a year.

Although Seven Families may have passed you by, it has been a success. Of the families supported, five of the breadwinners have been gently nurtured back to some form of work, something that is unlikely to have happened if the campaign had not run.

For example, Tracey Clarke, the woman we featured 18 months ago, is now busy pursuing a career as a writer and has found a confidence she didn’t possess before Seven Families came on the scene.

Tracey, who is slowly going blind, cannot speak too highly of the support she, her husband Tim and guide dog Oakley have received from the likes of counselling service RedArc and Action for Blind People. Access to counselling services is offered by most insurers when people make a claim.

On a wider level, it seems the campaign has also helped encourage a pick-up in demand for income replacement cover – a 10.7 per cent increase year on year according to Swiss Re – although overall purchases remain pitifully low (107,000 policies were bought last year).

Of course, there are many more things the insurance industry needs to do to make protection insurance fit for purpose.

Friendlier terms and conditions, written in plain English, would help. A more conciliatory approach towards disputed claims would also represent a big step forward as might a willingness among insurers to update old policies to make them more policyholder friendly. A little more positivity wouldn’t go amiss either (for some strange reason, maybe inherent conservatism, insurers are reluctant to promote the value of the cover they sell).

Seven Families has demonstrated that income protection insurance can make a big difference. It’s now up to the insurance industry to build on its success and convince people that such protection should be the cornerstone of effective financial planning – and just as important as creating wealth. IT hasn’t taken Baroness Altmann long to revert to campaigning mode, following her departure from the post of Pensions Minister she occupied since the Government came to power in May last year.

Within days of leaving Theresa May’s Government, she has called for a number of pension injustices to be rectified: a fairer deal for women whose State pension age has been delayed without warning, and a redistribution of the incentives people receive for investing in a pension so that high earners don’t enjoy most of the spoils.

She has also lamented the Government’s decision to delay legislation that would have given some pensioners a fairer deal from the Pension Protection Fund – the safety net that kicks in to make good work pensions lost when an employer goes bust.

The rules would have boosted the pensions of some 1,000 people – workers with more than 20 years of service behind them (not pensioners) when their pension scheme folded into the Pension Protection Fund.

Such changes were actually put in train two years ago by Steve Webb, Altmann’s predecessor. At the time he felt they were justified because the annual cap on payments from the Pension Protection Fund (now £33,678) was designed to catch people at the top of failed businesses – not longserving, loyal workers.

Altmann says the delay is ‘disappointing’. Inexcusable is more like it.

Income protection should become the cornerstone of effective financial planning