Number of short-term income protection products on market doubles

Opportunity knocks for financial advisers, analyst claims

The number of short-term income protection (STIP) products available to consumers has almost doubled in the last 24 months, in spite of the huge amounts of negative publicity around payment protection insurance (PPI).

Research by financial services industry analyst Defaqto, published this week, suggests that the number of STIP products on the market has risen from 20 in 2009 to 39 in 2011.

Defaqto said that in spite of the negative publicity around PPI, current conditions present increased opportunity for brokers selling STIP, including the opportunity to up-sell from mortgage payment protection insurance to STIP.

That is in spite of the fact that PPI providers are having to pay out billions of pounds to settle consumer complaints in the wake of an investigation by the Competition Commission.

Providers of STIP insist their products are fundamentally different from PPI, both in their make-up and the way they are sold. Last year an industry body set up to promote income protection issued proposals for a kitemark system that would help consumers to distinguish between PPI and STIP.

Ben Heffer, Defaqto's insight analyst for life & protection, said that in the wake of the PPI scandal, financial advisers are “well placed” to assist consumers by raising awareness of the need for protection and sourcing a package that is right for them. 

Defaqto said that increased shopping around by consumers following the PPI scandal is generating internet-based leads and creating opportunities to purchase STIP leads from aggregator sites. While brokers selling STIP should be aware of its “limitations”, it should at least be considered alongside other protection products to offer truly comprehensive cover.

The findings form part of a new report from Defaqto which is available to download free of charge at www.defaqto.com.

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