The Continued Importance Of Income Protection Insurance
In recent months there has been a backlash against Income Protection Insurance in the UK
. When it emerged that banks were selling people policies they didnt need or understand, hundreds of angry customers demanded compensation, and both the banks that sold the products and the products themselves because discredited in the eyes of many consumers.However, it is wrong to assume that because it was mis-sold by some unscrupulous lenders, income protection itself is unnecessary and untrustworthy. A great many families have benefitted over the years from the safety and security provided by policies that protected their finances at a cost that was compatible with their income.
Recent figures suggest that income protection is more needed than ever, with the problems facing the economy increasingly acute, and no signs of things picking up any time soon. People who are reluctant to give themselves some kind of financial safety net could find themselves in a dire situation if they lose their job or become unable to work for some reason. Accidents, sickness or unemployment can happen to anyone, and yet people now seem unwilling to prepare for such eventualities.
It is estimated that over 50% of the UK working population have less than 1000 with which to fall back on if they were to lose their jobs. The average working Briton has just 2,205 sitting in the bank, equal to just 1.7 times the average monthly take-home pay. The implications of this are dramatic. Breadwinners who become unemployed without sufficient savings to cover their expenditures will find themselves plunged into a spiral of debt and financial problems from which they will struggle to recover.
Incredibly, the number of people who have income protection now is smaller than at the start of the recession. So, can people overcome their recently acquired distrust and be convinced to start buying unemployment insurance once again?
It may depend largely upon consumer awareness. Since being stung with expensive lawsuits, the big banks have begun to steer away from offering these products, and consequently the market has become more balanced and fair, but also less prominent. Consumers often arent aware these kinds of products are available, and are even less aware of where they can get a good deal.
The FSA (Financial Services Authority) have taken steps to ensure the insurance industry provides only fair and transparent income protection services, meaning that if customers are not treated fairly, the insurers will face very hefty fines and penalties. It is certainly one of the most well regulated products on the market, and if this fact was more widely known it would go a long way to assuaging peoples fears.
If you are still unsure of whether income protection is right for you, seek out some impartial advice on the subject. There are still a wide range of suppliers with great deals to be had out there, and the continuing economic slump means that the need for this kind of service is now greater than ever before.
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