The future growth of the protection industry will not be through the advice channel, but via direct-to-consumer products, experts warn.
Protection guru Peter Le Beau says financial advisers will not be best placed to sell more cover because they are either focusing on other areas of the market, such as wealth management, or being pushed out of the industry by excessive regulation.
Instead, Le Beau, co-chair of the Income Protection Task Force, says providers "will probably need to go direct" if they want to reach the mass market.
The warning comes as Bright Grey joins Aegon Scottish Equitable and Norwich Union as insurers offering non-advised products direct to the consumer.
"If the protection industry is to grow, it will not happen through IFAs selling more," Le Beau says. "If we are going to break through into the mass market, we will probably need to go direct. It is a complex situation because people do need advice on insurance."
Bright Grey last week unveiled Lifestyle Protection, a simplified life and critical illness product available direct and without the option of advice through online intermediary The Idol.
The product joins Aegon Scottish Equitable's Simply Life and Norwich Union's Simplified Life as direct-to-consumer offerings open to consumers.
However, Julie Smith, head of protection at AWD Chase De Vere, warns direct products have no place in today's market.
"Some cover is better than no cover at all so, in one way, it [direct-to-consumer] is the lesser of two evils," she says. "But I think we should be trying to encourage people to seek advice.
"It's all very well saying that going direct will increase the number of people with protection, but at what cost? Without advice, consumers may be buying cover they don't need and don't understand."
According to Bright Grey, Lifestyle Protection, which it says is about 15% cheaper than its more complicated, but advised, menu-based offering, caters for those who will never visit an IFA.
"This is not dual-pricing and it is not taking business away from advisers," managing director Roger Edwards says.
"There is a growing space on the internet for those who do not visit an IFA and our research shows 50% of people never will. We are not getting any of that market and there are far too many people not getting any [cover] at all."IFAonline
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