Liverpool victoria predicts critical illness policies likely to outsell income protection cover
Increased premiums for critical illness (CI) insurance cover will not stop the policies outselling income protection (IP) cover, according to research from Liverpool Victoria.
While more than half of protection policies sold by IFAs include CI cover, only 23% include IP. The research indicates this difference is likely to increase over time as longer life expectancy and improved medical treatment begins to influence financial planning.
'This is despite the fact increased premiums are likely during 2003, as reinsurers take account of the likelihood of earlier diagnosis within their overall risk,' said Rye Mills, director of Liverpool Victoria's intermediary division.
Reinsurers have taken a similar viewpoint. Paul Casey, media relations specialist at GE Frankona Re, said: 'I am not surprised by Liverpool Victoria's conclusions and it will continue unless the IFA community makes more of the need to cover income. People prefer the lump sum aspect of critical illness. The public, and to an extent IFAs, see critical illness and income protection as similar, although they serve different needs.'
Kevin Carr, senior technical adviser at protection intermediary LifeSearch, said IP is perceived as a more complex product, although a reduction in the quality of cover offered under CI policies could see a resurgence in market share for IP.
'If prices continue rising and guarantees are removed on critical illness and not income protection, the gap would diminish,' he said.
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