It's been a year since the launch of the new welfare reform system in the UK, which was designed to get more people off State support and back into the workplace. But has this change been for the better?
Well you could argue the rule changes mean that it's made it harder for people who need to claim incapacity support to actually claim the benefit.
Let's look at the facts. From its launch in October 2008 and February 2009 193,8001 claims for Employment and Support Allowance (ESA) were made. Of these claims only 11% were deemed eligible for ESA support.
The reality is the Government's Welfare Reform changes have made it more complicated for people to claim this valuable ‘crutch' of support, it seems to me to be a case of survival of the un-fittest when it comes to getting government support.
These changes give you the opportunity to show your clients the benefits of Income Protection and can help you highlight the valuable benefits that IP offers. Would your clients really be prepared to gamble and take the risk of not being part of that successful 11% should they need to claim?
One of the greatest barriers to providing adequate advice to clients is their lack of understanding of what benefits both the State and their employer would provide to them. There is a misperception about the level of support that many employers actually provide. Eleven million people believe they are entitled to sick pay from their employer, however in reality only 1.8 million actually get some form of sick pay benefit through their work.
Are your clients aware of the impact on their earnings and lifestyle if they had to rely on State benefits for financial support?
If your client earns, for example, £30,000 a year then they would experience the equivalent of a 79% drop in their earnings each month if they were eligible for, and had to rely solely on, incapacity benefit from the Government. If they earn up to £70,000 a year it would be the equivalent to a 91%2 drop in their earnings!
These figures all present good opportunities to show your clients the situation they would be in if they were to become incapacitated and think they will be protected by the State. This is your opportunity to really promote the benefits of Income Protection.
Income Protection helps protect your clients financially and can also help maintain their standard of living. With the majority of claimants wanting to return to work, being able to maintain their standard of living can only aid their recovery.
Many providers have outstanding claims teams who can offer bespoke support to get your clients back on their feet and back to work.
Rehabilitation and proportionate benefit could make all the difference when returning to work. So it's not just a case of looking at what might happen if your clients can't work, but also selling to your customers that Income Protection not only financially supports them, but it can also help them in their recovery, and maintain that all important standard of living.
Remember selling protection is all about showing your clients why they need it; the level of incapacity benefit available from the State is just one reason you can use to promote Income Protection to your clients. The extra support many insurers provide through bespoke claims support, own occupation definitions, and proportionate benefit, means Income Protection becomes a far more attractive prospect for your clients. These are all important features you can promote to them.
It saddens me that despite the best efforts of the insurance industry the fact is a vast majority of the general public are not even aware of Income Protection. They think they will be protected by the State if they cannot work; they pay their taxes and their national insurance so why are they not fully protected?
However, I'm sure that if they were aware of these changes then they might be more inclined to think about the need for Income Protection, and you never know, they might even feel motivated enough to take out a policy. It's up to you to make the most of these opportunities with our support and really show the benefits of Income Protection.
1 New figures show thousands stopped from getting trapped on sickness benefit -
2 Figures based on basic allowance plus work related activity component (WRAC) of the Employment and Support Allowance at £89.80 per week - April 2009. This figure will vary based on the individuals' circumstances.
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