Defatqo the ratings agency have launched a 5 star rating for all short-term income protection insurance products, which is great news for consumers.
Why is this such good news, well what defaqto have done is deconstruct the products on how comprehensive they are within a 1-5 star rating. By introducing this, consumers have confidence that when purchasing a star rated product it has been researched and subject to thorough and extensive scrutiny before being provided the star rating.
So how does this help the consumer. At present it can be deemed difficult to compare the difference between products within the sector. With many websites available, consumers just have to type into Google keywords such as "income protection insurance" or "redundancy insurance" to see the plethora of companies all promoting similar products. This can be confusing to potential consumers as not everyone can understand policy wordings and all the complexities within them, let alone compare half a dozen.
Defaqto has advised that currently within the short-term income protection market 52% of products include unemployment cover as standard whilst 8% provide have it as an option. They have also advised that 44% offer unemployment cover on a standalone basis, whilst 53 % of these products have a benefit payout period of 12 months, with the remaining offering optional benefit payment terms.
Some remaining 16% offer an 18 month benefit payout period and a further 19% will offer 24 months.
Confused, exactly but the list and statistics continues somewhat further by covering long-term income protection products and limited benefit term products. The complexity can be boggling to the consumer and expert alike.
Well its no wonder defaqto have decided to try to simplify matters, not only for the consumer but also financial advisors. Defaqto have researched and rated products accordingly, in fairness a 3 star defaqto product does not mean it is not comprehensive and suitable cover. It does not however, tick all the boxes. The reason I mention this point relates directly to the fact that it's common for companies not to promote defaqto on their products unless they hold 5 stars.
What does transpire is that the consumer can more readily understand, whilst the financial advisor can explain in a more simplified structure the complexity of the products. Which can offer variances such as cover, excess, exclusions and additional features and benefits.
The ratings will in the opinion of defaqto provide individuals with the knowledge of the range and level of features and benefits that different policies have. Welcome news for what can be a difficult market for the client to navigate through. This is especially true when purchasing products online without the help of an advisor or specialist who dictates the questions and answers to naturally direct the client to the product required.
Income protection insurance or redundancy cover as its sometimes known is an insurance product that insures consumers monthly out-goings or commitments by way of a monthly premium against loss of job, accident or sickness. This premium insures a benefit amount, which in general is based upon the clients monthly income or an insurable asset like a mortgage, rent or loan.
With unemployment running at an all time high the addition of this product range is a welcome and timely inclusion. Not only for consumers who require redundancy insurance but also for financial advisors and online brokers who can benchmark income protection insurance products to clients and provide them with satisfaction that defaqto have given their seal of approval.
Welcome news in a tough climate.
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