Putting the case for income protection

A final point on the subject on income protection sustainability is the comments about over insurance; sure there is some level of this that happens as agreed value claims can artificially hold up claim levels long term when the underlying income has reduced. As too when on claim, there are increased costs that are not accounted for by policies.

These costs are expected to be absorbed by the policyholder out of their claim payment. Can be somewhat difficult when they chose to be underinsured more than usual too.

One bit that has not been mentioned and is potentially the most significant, income protection is there to support the family’s lifestyle in adversity. It is not there to slowly grind the policyholder and their family into the ground.

Many claims have a degenerative nature to them, where an initial claim gets people on their feet, but they now have a compromised ability to earn. This then rolls into the next claim, rinse and repeat.