Protection for the Autumn (Winter!) Statement
With the budget deficit taking longer to reduce than the Government forecasted, the Treasury has now extended the proposed austerity period until at least 2018. Crucially, the austerity period has been characterised by falling wages and job insecurity, piling the pressure on people to work – and stay working. The Autumn Statement is announced on Weds December 3rd, which I’m sure falls under the heading of winter, rather than autumn, but either way further cuts to the welfare system are pretty much a foregone conclusion, with promises from both the Labour party and the coalition to make savings in this area. The Chancellor has said that £12bn needs to be cut from the welfare bill, meaning that many will have no safety net should they find themselves unable to work through ill health or injury. It is therefore fair to surmise that the number of people vulnerable to this will increase regardless of who wins the election; with cuts of this scale being made to the welfare system, people, especially homeowners, must now consider their Plan B should they find themselves unable to work. Add into the mix British workers suffering a sixth straight year of falling real pay, taking earnings back to levels last seen at the turn of the century, and the grim reality of the situation starts to set in. Ultimately, weak wage growth coupled with inflation has resulted in British workers being no better off, so borrowing remains high. We know that house prices, when compared to wages, are high across the country and most people borrow to afford a deposit on a new home, but first time buyers tend to be the most vulnerable; often they are early into their careers and their risk of redundancy may be higher. They also tend to be less likely to be signed up to protection products, meaning that they have less in the way of contingency plans, as well as less in the way of savings. While repossessions have continued to fall this quarter, the effect of an inevitable interest rate rise may well slow or reverse this trend in the coming months and years. Those not saving for this inevitable shift must either rely either on their creditors to support them, or make other contingency arrangements for a time in the all too foreseeable future, when the cost of servicing their debt rises. The fact is, people can no longer rely upon the Government to support them if and when they fall on hard times. There is therefore a very real need for workers and homeowners to safeguard themselves and their families from the financial impact of unexpected illness, accident, unemployment and death. Protection insurance and, in particular, income protection, is all too often viewed as a needless expense, but could in fact be the very lifeline needed should a homeowner fall ill and find themselves unable to work and, thus, keep up with the mortgage repayments.
The Seven Families campaign has offered real insight into the benefits of protection insurance since it was launched earlier this month. The campaign provides a year’s financial assistance to seven families who have suffered as a result of ill health and effectively demonstrates the kind of differences a financial safety net can make to a struggling family. Not only is this the first campaign of its kind, it is also probably the first time so many major companies have worked together for a common purpose – and got widespread support for doing so. The press coverage and social media buzz arising can be used to help demonstrate the true value of protection to new and existing clients. There's a website, facebook page, twitter account, you tube page and lots of consumer press coverage – all of which act as a powerful message for protection insurance.
News in brief
• Scottish Widows has revealed it is planning to offer protection policies via wrap accounts as the firm makes strides on its return to the adviser market next year.
• VitalityLife, formerly known as PruProtect, has launched a range of new products including LifeStyle Care Cover, Mortgage Plus and Short term income protection.
• Seven Families has announced that the Pickfords, whose main breadwinner Paul Pickford was unable to work after suffering a stroke, is the third family for its campaign to raise awareness of the benefits of income protection
• Aviva and Friends Life are set to merge in a deal worth £5.6bn – but what will this mean for legacy policyholders?
• CIExpert has announced enhancements including the addition of four past providers to the database, meaning advisers can analyse 40 providers with over 250 policies when re-broking an critical illness existing policy.
• As part of changes to its income protection, Friends Life has announced a family carer benefit.
• LV= has said the recent Office for National Statistics (ONS) data which showed people will be living longer and in better health highlights the need for financial planning.
• Family income benefit has been added to the Finance & Technology Research Centre’s (F&TRC) Quality Analyser research tool.