Income Protection 2012 By Hoskin Financial


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Overview on Income Protection by Paul Hoskin at Hoskin Financial Planning Maldon Essex

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  • To get us started, let’s do a quick warm up looking at what do your clients currently insure. So here we have a few, the car, the house, the contents, pets, mobile phones. A key one…loss of income.Sometimes its even the most unusual things that people will insure…Yes it does exist, there is a policy underwritten by Lloyds of London that can cover you against alien abduction. So what percentages of people do we think have these things insured?So here we have it. 61% insure their holiday; 78% insure their house contents. 71% of people insure their car. But what about loss of income? Well look it’s only 9.4%! That’s less than half the percentage of people who insure their pets or their mobile phone!Okay so how many policies do we think are in existence today for alien abduction? Well the answer is [last reveal] 40,000. Yes, honestly…”
  • As illustrated on our last slide, our claim stats indicate that on average a client will claim on an Income Protection policy for 7 years. If that client does have a shorter term product in place to cover their income, where is that foundation block when the short claim period ends yet they are still unable to work.It is also worth noting at this point the difference between what a client would be covered for on an income protection product compared to perhaps say a CI product. Our claim stats again illustrate that a large proportion of our IP claims are for disclosures such as mental disorders or musculo-skeletal disorders, both of which would not be covered under a CI policy.
  • When it comes to matters of sex, some of our European partners are renowned for their more liberal approach, romanticism, guile and prowess. Yet, interestingly, the EU Gender Directive flies in the face of individuality and sexual expression.  From 21 December – commonly termed ‘G Day’ – men and women have to be treated the same when it comes to insurance premiums.There is virtually no chance that it will be derailed, delayed or changed. From G-day, insurers will no longer be able to offer genderspecific rates for many classes of protection.But with change does come opportunity as we’ll cover in a moment
  • This table gives you a flavour of how prices might change post G day. It comes with caveats, lots of them. It’s not an exact science and will vary by provider and there are variations even within classes of business, but hopefully it serves as a useful guide.The cumulative effects of Gender and I minus E are likely to result in the cost of life and critical illness increasing for most people but to what extent, will depend on their gender (amongst other factors). Income Protection: When it comes to income protection, before G Day, men could expect to pay around 40% less for cover compared to women. So, post G Day we can expect the cost of income protection to come down for women and rise for men. Critical illness: For critical illness cover (often combined with life cover), it’s a little more complicated. Before G Day on average, women pay around 10% less than men – but in some cases women pay more. So, on the whole, the Gender Directive will result in women paying more for critical illness and men a little less. For some though there might little noticeable change and for younger and older men the cost of critical illness will go up. Life insurance: Before G Day women typically pay on average about 20% less for life cover than men. So, on the whole, the Gender Directive will drive up the cost of life insurance for women, and men will pay less. Joint life cases: We can expect little change for underwritten whole of life cases. However, if here is a wide age gap between the lives, then costs could go up or down depending on which person is the older and the type of contract.
  • Income Protection 2012 By Hoskin Financial

    1. 1. Income Replacement Paul HoskinHoskin Financial Planning 1
    2. 2. What do clients currently insure? 61% 63% 23% 78% 71% 20% Alien abduction? 40,000 Loss of income 9.4%
    3. 3. The Reality CheckHow would you supportyourselfif you were unable work
    4. 4. Savings? What’s more 27% of Britons have no savings whatsoeverReality check: Source: ING Consumer Savings Monitor Q4 2011It is estimated that the average person’ssavings is £2040 as at the end of Q2 2012.It may sound like a large amount to someclients but £2040 is only 46 days worth ofsavings.If your clients were unable to work for sixmonths due to ill health it would leave mostpeople short on savings*Source ING Consumer Savings Monitor Q2 2012*based on average income / 1.3 x average take home pay
    5. 5. 6
    6. 6. In the Press…
    7. 7. The plugLoss of income…Pension would stop…Use their savings…Can’t pay the mortgage…lose their homeLife goes down the plughole…• A plug to stop that happening
    8. 8. Claims statistics Source: LV= Income Protection Claims Statistics 2010/2011 21121512
    9. 9. Which jobImagine you were made redundant & looking for a new jobYou saw an advert in the paper for 2 positionsBoth jobs are ideal with exactly the same packagesExcept for ONE thing Job A pays around £35,000pa Job B pays £34,600 plus, if you were sick, 60% salary until you got better or retired.….which would you take?
    10. 10. The vicious circle You fall ill / injure yourself You take time off to recoverYou work too hard to catch up onworkload or to recoup lost income Income not protected Debts increase / credit rating being affected You return to work too soon
    11. 11. ‘G’ day…no sex please we’re European From 21 December 2012 insurance will cost the same for males and females… The cost of protection is set to change Change = Opportunity 12
    12. 12. The Combined Impact of Gender and I minus EFrom 21 December Males FemalesProduct Currently… The impact of Gender and I minus E ?Income Women pay 65%Protection more than men +20% -28%Combined Men pay 10%Critical Illness more than women* + 6% +16% Men pay 20%Term more than women + 3% +22%Underwritten Men pay 20%Whole of life more than women + 2% +20%* In some cases, women pay more than men
    13. 13. AnyQuestions?