A clear sign someone really needs income protection (IP) can become apparent by asking one simple question – do they rely upon earned income to keep the roof over their heads and food on the table? If the answer is yes, then they really need to consider it.
But there can be other tell-tale signs. They may have little money left over at the end of the month, no emergency savings fund to fall back on and, as is the case for the self-employed, they don’t even qualify for statutory sick pay.
While we have seen an increase in the uptake of IP policies in recent times, it is still slow progress, especially for the self-employed.
Indeed, according to LV’s Reaching Resilience report only 6% of the 4.39 million self-employed people in the UK have IP.
Given self-employed people rely on their earned income to survive like the rest of us, I don’t think being able to spot someone who really needs IP is the problem. The tricky part is helping self-employed people spot their own need and, moreover, to act upon it.
So, why do so few self-employed people have income protection?
Is it because they are so busy pouring energy into the day-to-day running of their business that they don’t have time to even consider the what ifs? I believe that’s part of the problem.
Self-employed people are generally self-reliant, stoic and, above all, not afraid to take risk. All great attributes, and likely the very reasons they chose to work for themselves in the first place. But sometimes this can make it harder to get the need for IP across.
Conversely, they work long hours, often under enormous stress, pushing themselves hard – and this can take its toll. Add to this the fact they can’t take time off very easily and it’s the perfect storm.
The needs are clearly there, but how do we encourage more self-employed people to see the benefits of protecting their income?
Just because someone ‘hasn’t had a day off sick in their life’ doesn’t mean that will always be the case, especially as they get older.
The average age of a self-employed person is 40, the very age when health issues can rear their head. Perhaps this could bring a reality check moment.
And it’s not all about the money. Sometimes the ancillary benefits grab the attention. Tradespeople, for instance, who can imagine what the impact of a broken leg or spell in hospital would have on their ability to work – and their pocket – may well find fracture cover and hospitalisation benefits are the features that tick the box for them.
Self-employed people, who are generally short on time, often neglect their own health by putting their business before themselves. If ever they ‘allow’ themselves to be ill, their goal would be to get back on their feet as soon as possible.
This is where discussing added value services could be a game changer. Many plans have access to a GP 24/7, for example, and physio, rehabilitation and counselling could speak volumes to those who very much like to be in control. This way they may be able to speed up their recovery and get back to business sooner.
The most important thing is to spot the signs, which are abundant, and ensure that discussing IP and all those great features is always on the table.
Angela Davidson is head of protection at Mortgage Intelligence UK and member of the IPTF workstream on income protection and the self-employed
