But how much will Brits spend over the festive period, and what would be the spending impact of sickness for most UK adults? 

You may have heard of "Black Friday" before and thought, "What is Black Friday?"

Black Friday is always the day after Thanksgiving in the US, which falls tomorrow, 25th November, this year. For those brave enough to venture out to any store in America, it's the largest shopping day of the year, packed to the gills with bargains. This is also followed by Cyber Monday which features more of these bargains online.
 
UK shoppers have also been able to take advantage of Black Friday sales over the last few years, with stores like ASDA and Tesco Extra turning into battlegrounds as consumers scramble for the cheapest TV. What a time to be alive!
 
Earlier this month, PwC conducted a survey of over 2000 UK adults and discovered that a quarter of consumers plan to buy on Black Friday or Cyber Monday with an individual expected to spend an average of £203; a much higher total than the average £73 British adults spent last year.
 
Commenting on the survey results, Madeleine Thomson, Retail & Consumer Lead at PwC, said: “Our research shows Black Friday and Cyber Monday are definitely here to stay, with sales over the weekend due to grow by a predicted 38% to £2.9 billion.”

In addition to this, according to various newspaper reports, the average UK resident will spend around £900 - £1,000 over the festive period, with two-thirds of people expected to pay for the cost of Christmas using savings and or credit cards. With this in mind,19% of people admitted they failed to budget for the festive season.

Ironically, this amount is the figure that is widely quoted as the average UK savings that could be called upon in an emergency if the main earner were to be ill.

We are told that 10.8 million households, (more than 60% of working families) would be entitled to little or no state support if the breadwinner had to stop working and that less than half of employers (43%) offer sick pay over and above the minimum statutory requirements. That would leave the householder with either £88.45 Statutory Sick Pay or £73.10 per week in the assessment phase or a maximum of £109.30 after that lengthy process.

Legal & General’s “Deadline to the Breadline” report tells us that the average household in the UK has a deadline of 29 days. This means that in just over four weeks of losing their usual sources of income, unless they have some other strategy to mitigate financial hardship, the average UK household will be reliant upon state benefits and friends and family alone for financial support during their financial hardship.

According to some further stats, we know that:

• A 30 year old male non-smoker has a 32% chance of being off work sick long-term
• A 35 year-old female smoker has a 55% chance of being off work sick long-term

So, in theory, we have a situation where a prolonged period of absence is likely, and factually, the average claim will last for over 6 years. This highlights that, without some kind of insurance policy, the majority of UK adults cannot afford to be absent from work for a short period of time at any time of the year, especially near Christmas.

However, quality advisers supported by innovation from Providers have started to raise customer awareness of these issues and begun to sell more Income Protection Products. A report recently published by Gen Re confirms positive news of an increase in overall Protection sales by 5%, with new Income Protection policy sales rising by 9.1%, and Critical Illness sales rising by 7.5%.

Providers have looked carefully at both their IP products and pricing and developed more cost-effective plans. In addition, software houses like iPipeline have also helped with their predictive pricing models, showing just how much value there is in IP policies – especially those linked to shorter claim periods.
 
The Providers below have worked to evolve their IP plans to suit the current market and are benefitting from increases in sales. Many of them have spoken at Paradigm events during this year and, as a result, have seen significant increases in awareness.
 

Royal London: How many of your clients still get 6 months paid sick leave?

Royal London say that every day a quick scan of the news reveals some new horror that will change the lives of those involved forever – the unlucky accident on the way to work, a tragic illness that cuts a young life short or the holiday accident that leaves more than just a scar to cope with.  They believe we barely take notice of them as we get on with our day.  Those involved however have to pick up the pieces and there is often very little support available to help them.

They beg the question: “How many of your clients still get 6 months paid sick leave?”

With the days of generous state support seemingly long gone, this combination is a powerful argument for comprehensive cover. And yet take up of income protection remains stubbornly low. Instead, people (though still not enough of them) buy life cover because we all die eventually right?  Well that’s true but most of us don’t die within our working lives.  The risk of long term absence from work, however, is much higher.

While clients will tell you that they can’t afford protection that’s not necessarily true either. Take a look at Royal London’s lifestyle calculator – even better get your clients to put their details into it.  It adds up the cost of all those incidental expenses we never budget for. They’ll be shocked at how much they could save and how much protection this could buy. Find out more about Royal London’s Income Protection.
 

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The Exeter: Are your self-employed clients protected?

The population of self-employed workers is on the rise but a recent article in Cover reported that the majority are not prioritising protection insurance for their families.

Some highlights from the article following research from Scottish Widows, include:

• Two thirds of self-employed workers' households are reliant on one income.
• 4.3 million have no protection in place if they were unable to work due to illness.

Sometimes statistics aren’t enough to convince your clients that their income needs protecting. It’s still too easy to think ‘it won’t happen to me’. The Exeter provide two ideas to help you hit the message home:

• Show your clients the real life claim story of, David. As a self-employed builder, everything changed for David after a motorbike accident resulted in a severe brain injury. Income protection from The Exeter prevented him from falling into serious debt, while their rehabilitation benefit enabled him to return to work just 2 years later.
• Use The Exeter’s Financial Forecast Calculator to show your clients the shortfall they would face if they had to rely on sick pay from the Government. 

The Exeter’s benchmark plan for manual and physical occupations, Pure Protection, offers key benefits that can prove invaluable to self-employed workers:

• Waiting periods start from Day 1.
• Claims are only ever assessed on an ‘own occupation’ basis.
• Clients can fix their benefit to protect against a regularly changing income.

Give them a call on 0300 123 3207 or email sales@the-exeter.com
 

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Legal & General - bolstering their Income Protection Benefit Plan Proposition 
 
Legal & General have launched their new two-year payment term, Income Protection Benefit (IPB) plan, designed to meet the growth in the low cost market.

The target market for Income Protection products remains unchanged – for individuals looking to protect their income until their selected retirement age, L&G’s Standard product will cover them long term. For those customers wanting to protect their income for a shorter period, L&G’s new two-year Low Cost option is now available should they become ill or incapacitated and suffer a loss of income.

They’ve also improved the replacement ratio for both the Standard and Low Cost versions of the product, which is used to calculate the maximum benefit based on annual earnings.  New limits will be set at 60% of the first £60,000 of gross annual income and 50% of income in excess of that figure.  This is designed to provide customers with a monthly benefit that equates to a greater percentage of their salary than previously permitted.

Legal & General are constantly looking at ways to make their products more appealing and more relevant to today’s customers, and believe these updates keep that customer centricity as the focus; enhancing value for money providing an alternative and competitive choice in the marketplace.

Legal & General have a range of support designed to make it easier for you introduce your clients to income protection:

• They've updated their customer facing brochures with the latest information, as well as their Adviser Guide.
• New IPB Claims Infographic which highlights the potential need for income protection and their claims payment information. 
• L&G have also updated their useful IPB Calculator. If your clients couldn’t work due to illness or injury, could they live on £88.45 per week* from the State?  This calculator will help you work out their maximum monthly benefit and their stepped benefit options based on their current salary.

Recommending cover to protect against all eventualities is fine in principle, but for some clients, simply isn’t affordable. If price is an issue, there are ways to bring down the cost - they call it ‘skiing downhill’ at LV=.

• Choose a ‘budget’ plan - These products can be significantly cheaper than ‘full’ IP and operate a limited claim payment period – two years with LV=.
• Increase the waiting period - it's a good idea to base cover on how long your client can wait before their policy pays out - looking at employer sick pay entitlement or savings is a good place to start.
• Reduce the cover - what monthly IP benefit does your client need, rather than want? If some outgoings aren’t vital, you could recommend a lower level of cover with your client cutting out non-essentials whilst they’re claiming. Or, if your client’s partner works and contributes to the household income, you could recommend enough cover to pay a regular outgoing or debt (like the mortgage or rent). 
• Does your client need cover for a particular period only? You could reduce the IP term and look at ending the policy in line with their mortgage for example.
• If your client has a repayment mortgage, recommending decreasing life and critical illness cover should free up some budget for IP.