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Misuse of the terms Income Protection and Payment Protection

An article setting out the need to provide clearer information in the insurance industry, especially for income protection and payment protection products. Given the similarity of these two policies there has been some consumer confusion which has not been helped by the interchangeable use of these two terms.

Author: James P White
Date: Jan 30, 2010 - 2:13:56 PM

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An area where the insurance industry has gone wrong in the recent past is in the use of the term income protection to describe payment protection, which are two distinctly different policies. It can only be assumed that this is done for marketing purposes by insurers and brokers. The impact of this is to potentially mislead consumers and casts a shadow over the integrity of the insurance industry as a whole.

Consumers are not expected to know the details of all insurance policies available in the market. It is for insurers, brokers and advisors to provide sufficient information for them to make an informed decision. The issue is that individuals frequently search for income protection when in fact they are looking for payment protection (such as mortgage payment protection insurance, for example). This is probably because it is the term that seems most natural to their situation. Insurance marketers know this and angle their website and marketing material towards this term (most likely to gain more website hits via search engines). The result is that some people end up mistakenly buying income protection instead of payment protection.

As an insurance broker I have seen countless people who have mistakenly bought income protection instead of payment protection. This is one of the big problems with selling insurance online, there is no consideration taken to the customer’s needs or situation. Policies being sold online are now commonplace and this is unlikely to change any time soon, so in the meantime insurers and brokers need to provide the best information possible to help their clients with their policy choices. For a start, any income protection page should clearly explain what the policy does and have some information about both income and payment protection, and their differences. It is only in this way that online insurance consumers can make solid financial decisions. Whether new industry regulations are needed is a matter for further debate.

This article was produced by James P White of Drewberry Personal Mortgage Protection Insurance (DP-MPI), specialist providers of information, advice and broking services in the mortgage life insurance and mortgage payment protection insurance markets.

View all articles by James P White

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