Income protection Our verdict

Which? thinks advisers have been taking the soft option

IP is the one form of protection most of us need but hardly anyone has it. The financial services industry must shoulder most of the responsibility for this.

When you buy a mortgage or loan you’ll often come out with a protection policy tucked under your arm – the problem is it’s usually the wrong one.

For too long financial providers and advisers have taken the soft option and chosen the easier sales of critical illness and payment protection, rather than take the time and trouble to make sure their customers are properly protected. This has to change.

To help, we believe IP products should be simplified. The underwriting process needs to be more straightforward and insurers should have a standard set of occupation categories. We also feel you should be able to receive a higher level of income than £85 a week without state benefits being reduced.

If you need IP then make sure you get the real deal. Insurance products like payment protection and mortgage payment protection sound similar, but these policies only cover a specific debt – like your mortgage payments or loan repayments – they won’t give you any income to pay other essentials like bills.

They also pay out for a limited period – usually 12 months, unlike IP which pays out until you can get back to work or until the end of the policy term whichever is longer. Despite the limited cover these other policies often cost about the same as IP.