According to a recent survey, Defaqto, has found 60 per cent of customers don’t think they need any kind of income protection.
The nationwide scandal surrounding the mis selling of payment protection insurance has tarred this type of product resulting in many within the industry to be fearful customers are leaving themselves vulnerable should they find themselves unable to work and meet their monthly outgoings.
PPI mis selling has undoubtedly contributed the decreasing sales of income protection policies. However there is also a general belief amongst customers that they will not be off sick for any significant length of time and therefore would not need such a policy. Of those who did think about the “what ifs” believed they would simply have enough money to get by.
Payment protection insurance, taken out with a loan or credit card, was designed to protect a policyholder should they be made redundant or be too ill to work and, as a result, be unable to meet the monthly repayments.
While the product is considered to have limitations, this was not the reason behind the current controversy; it was about the manner in which it was sold to customers, many of whom were either pressured into buying it, not fully covered by it, or weren’t even aware they had it.
Lenders have collectively set aside over £9bn to cover the costs of PPI compensation claims.