Royal London

Have we got our protection priorities all wrong?

Robin Carr

Head of Adviser Development

At Royal London, we have a tool on our adviser website that shows the relative risks of death, critical illness, or being unable to work due to incapacity.

We measure these risks using the age and gender of the client and over a period of time prescribed by the adviser. In other words, we make it personal.

As an example, a female non-smoker aged 30 runs the following risks before she turns 65*:

  • 3% risk that she’ll die during that time
  • 12% risk of suffering a critical illness
  • 44% risk of being off work for two months or more as a consequence of sickness or accident.

So to put that in plain English, her risk of being off work through accident or sickness is four times greater than the risk of critical illness and 15 times greater than the risk of death.

Of course, depending on circumstances, any of these outcomes could cause financial devastation for the individual and their families.

Now, what if an adviser were to suggest to a client that there are three main threats to their health and well-being, all of which could have disastrous consequences on the family finances, but that the good news is that protection insurance is available to offset those financial effects should the worst happen?

And what if he went on to say that, statistically, one of those risks is very unlikely to occur during the years the client is paying off the mortgage, or bringing up the family. The second risk is statistically much more likely than the first. But it’s the third risk that has, by a considerable margin, the highest probability of happening and, if it does, could result in similar or worse financial consequences than the first two?

If you were the client, which of those three risks would you want to talk about first: the least likely one; the more likely one; or the most likely one? If you’d been told that the consequences of all three could potentially be financially disastrous, then I’d hazard a guess it would be the last one that would attract your attention. Put like that, it is, as they say, a bit of a ‘no-brainer’. And you’d probably also accept the logic that protecting yourself against more likely risks could be more expensive than protecting against the less likely ones.

If your adviser goes on to tell you that there are ways to provide cover for the third risk that would work within your budget, you’d probably be pretty interested, wouldn’t you?

Old habits die hard

In the protection industry, we successfully turn this logic on its head, don’t we? In our recent State of the Protection Nation research, 26%% of adults in the UK we surveyed said they had life cover, 6% had critical illness cover and only 4% had income protection**. We all know the reasons for this – they’ve been well-explored by commentators for years.

But surely the time is now upon us when our attitudes have to change? Maybe it’s time to break long-held prescription habits? Is it always reasonable to take the view that if there’s anything left in the budget after buying the life cover it can be used to buy a little critical illness cover as well and ignore income protection in the process?

Is it time to look at income protection again?

We often talk about income protection being a difficult product to work with - it’s complicated, it has too many variables, the underwriting’s trickier than for other covers, the clients can’t afford it. But that ignores just how far products have developed in recent years. Underwriting has become slicker and more inclusive. It’s easier for the self-employed to get cover. The solution for the client can be crafted and tailored so that it actually fits within the budget. Products these days come packed with added-value features that can make a huge difference for clients and their families.

So maybe the days of ‘life cover with a little bit of CI’ need to make room more often for ‘life cover with some added IP’. For this to happen, many advisers need to change their approach to the protection sale. During my 36 years in the industry, I’ve met plenty of protection advisers who have done just that. They’ve taken the big step of accepting they need to place far more priority on talking to clients about income protection. Some of them do so before even touching the subject of life cover. And it’s no great surprise that these advisers generally buck the trend and sell far more income protection than others.

To find out more about our Income Protection and the tools we have available to support you, go to You can download our State of the Protection Nation Report at

*Based on Hannover Re’s interpretation of the Institute and Faculty of Actuaries’ Continuous Mortality Investigation insured lives incidence rates together with their estimate of future trends. Incidence rates for the entire population may be different to those lives that take out insurance products.

**Source: State of the Protection Nation March 2017, Royal London. 2,000 nationally representative adults (18+) surveyed.

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