What is the value?
Over the past few years, particularly post-Covid, the landscape of income protection (IP) has seen a significant shift towards holistic offerings, highlighting not just financial security but also the overall wellbeing and career stability of policyholders.
Analysing application trends from over 23,000 IP applications in 2023 (data provided by IRESS) reveals that features such as health and wellbeing programmes, as well as return-to-work support, were the most sought-after, reflecting a growing awareness and demand for comprehensive coverage.
Health and wellbeing initiatives fall into one or two key categories: support if you are ill or injured and support to keep you fit and healthy:
- Support if you are ill or injured encompasses: 24/7 digital GP and nurse access, mental health support, physiotherapy and second medical opinion.
- Support to keep you fit and health encompasses: health checks, nutrition consultations, fitness programmes, preventive care measures and discounts on gym or home fitness.
This trend highlights an increased recognition of the importance of maintaining physical and mental health to mitigate long-term risks. Employers and individuals alike are prioritising policies that offer proactive health management tools, a shift from reactive to preventive care strategies.
Recent Pacific Life Re consumer research from April this year (2024) suggests not all customers find value-added services appealing. Of those asked, 19% thought they pushed prices up or felt they would not use them.
There was a big contrast between insurers and consumers with regards to awareness of the availability and access to these services. Of those asked, 51% of customers were not sure or unaware of the services available, compared to 86% of insurers believing customers were ‘very’, ‘fairly’ or ‘somewhat’ aware of their value-added service offering. There is clearly more work to be done to ensure customers understand what they have and how to access it.
These trends indicate that modern IP insurance is evolving to address broader aspects of an individual’s life. Insurers are recognising that offering comprehensive, flexible and proactive features is key to meeting the demands of today’s policyholders.
As such, the industry is moving towards more inclusive and supportive insurance solutions, ensuring that protection extends beyond financial compensation to encompass overall wellbeing.
Industry thoughts
Whilst the data suggests value-added services have some steps to go, how does industry sentiment surrounding the addition of products to IP respond to this narrative?
Michelle Grant, senior adviser and protection specialist, LifeSearch, said: “As an adviser, it is fantastic news that the insurers are increasingly looking to innovate, reward and regularly engage with our clients to keep them focused on their overall health and wellbeing.
“Particularly attractive to my clients are regular touch points such as annual health checks, GP 24/7, and access to counselling for difficult times. These are brilliant ways to help clients engage and keep on top of problems before they escalate into situations which require time off work. I believe it’s a win-win for both insurers and clients as staying focused on overall wellbeing day to day positively impacts healthy outcomes long term and less likelihood of claims.”
While the idea of value-add is well received, it falls on providers as well as advisers to actively engage customers with the product, according to Steve Casey, marketing director, Square Health.
Casey said: “We can see from our data, where a provider has an active communications strategy with their customers, including annual benefit statements, customers are not just accessing the services, but becoming repeat users. On certain disability portfolios, we can identify over 50% of consultations that fall under this category.
“What is clear is that ongoing customer engagement is fundamental and should be a cornerstone in demonstrating customer value for every insurer.”
From the provider side of the aisle, Andy Philo, director of strategic partnerships, Vitality, said: “IP is invaluable where someone is off work due to injury or illness, allowing them to pay their bills and recuperate, but we also know that people don’t want to be off work any longer than they must.
“We have always believed that all insurance should start with prevention and added-value services should be available and ready to use both before and after a person needs to claim. For IP, that means health and wellbeing support to live a longer healthier life as part of our Vitality programme, alongside clinical pathways that provide the necessary support to recover quicker after a claim.”
Warren O’Connell, head of business development, IRESS, said: “Providers offer a range of value-added services, it was with direct feedback from our customers that we developed our ‘Features’ proposition.
“In collaboration with every provider in the market, we agreed a set of features to enable comparison across the IP space, along with the ability to showcase further value-adds. We have seen fantastic feedback from our clients who now have this information at their fingertips to enable thorough research and recommendations to their customers.”
