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.
Misuse of the terms Income Protection and Payment Protection
By James P White
Jan 30, 2010 - 2:13:56 PM
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.
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