With just 9% of UK adults holding cover, the protection gap starts with how the mortgage appointment is framed
Mortgage advisers should treat income protection as part of a borrower's core affordability picture rather than an optional extra, according to Jamie Page (pictured top), who heads up distribution at The Exeter, a UK mutual friendly society providing protection and healthcare insurance.
Speaking during Income Protection Action Week, which began on 21 September and is run by the Income Protection Task Force (IPTF) under the theme "the moments that matter", Page told Mortgage Introducer the industry has historically started with the mortgage instead of the income that pays for it.
"Everybody wants the home, they don't want the mortgage," he said. "We naturally think about protecting the property with all the insurance, but we don't actually protect the people that are earning to pay the mortgage."
Page, whose remit now covers The Exeter's life, income protection and healthcare distribution, questioned whether a borrower who cannot find room in their budget for protection can genuinely afford the mortgage.
"Income protection shouldn't just be something that's bolted onto the end of a mortgage conversation," he said. "It should be part of the understanding of the customer's overall financial resilience of that mortgage."
Why awareness is not turning into income protection cover
The Exeter's Google Trends analysis found UK searches for income protection rose 30% in the 12 months to 10 July compared with the previous 12 months. Yet its Consumer Health and Finance Tracker, a survey of 2,000 UK adults, found only 9% hold a policy.
That shortfall comes days after the Financial Conduct Authority (FCA) published the final report of its Pure Protection Market Study earlier this week, finding around 58% of adults have no life insurance, critical illness cover or income protection. The regulator stopped short of new rules, and industry reaction to the study focused on how providers and advisers can close that gap together.
Page said there was no single explanation, pointing to affordability, understanding, competing financial priorities and simple inertia.
"We are all busy now, and although we know we've got the need, it's sometimes getting round to it," he said. "I'll be honest, I'm going through a will and lasting power of attorney at the moment, and I've got emails in my inbox. I need to action things. I just can't get round to it."
The same tracker found 21% of UK adults save nothing in a typical month, while 18% had taken four weeks or more off work due to illness, injury or mental health in the six months to March. Among that group, 23% relied mainly on savings for income and 9% turned to credit cards or personal loans.
"Awareness alone doesn't really create the financial resilience, and that's about them putting the policy in place," Page said.
Statutory sick pay is a safety net, not a salary
Government reforms to statutory sick pay (SSP) under the Employment Rights Act took effect on 6 April, making it payable from the first qualifying day of sickness. They also scrapped the lower earnings limit, the £125-a-week threshold employees previously had to reach to qualify, which the government said had left up to 1.3 million low-paid workers ineligible. SSP is now paid at the lower of 80% of average weekly earnings or £123.25 a week.
Page welcomed the changes but warned that many consumers may not even know SSP exists, let alone how little it pays.
"We shouldn't confuse having a safety net with ultimately replacing somebody's income," he said. "We shouldn't be just telling people that they could get statutory sick pay, which pays £123.25, we should be putting this £123.25 alongside their mortgage payment, then add in the council tax, the energy, the food, any childcare, and any other monthly commitments. Then simply ask the question of that client, how would you bridge that gap if you haven't got the salary?"
Self-employed borrowers have neither employer sick pay nor SSP to fall back on, and Page urged advisers to examine how variable their income is, what savings they hold and how long both the household and the business could keep going. Brokers weighing why income protection keeps getting skipped in mortgage appointments will recognise the challenge.
Affordability should shape the income protection conversation
Page still uses the "three Rs" he relied on when he was on the road some 20 years ago, when income protection was known as permanent health insurance (PHI). Once a claim is in payment, it stops only on retirement, death – "rest in peace" – or a return to work.
"Affordability should shape the protection conversation, not prevent it, and it doesn't necessarily have to be all or nothing," he said.
The benefit amount, the length of potential claim and the waiting period – the time between stopping work and the policy starting to pay out, also known as the deferred period – can all be adjusted to change the premium. Page stressed the recommendation must still suit the individual customer.
"The advisers are incredibly time pressured," he said. "They're dealing with clients that potentially don't want to have the conversation but need to have the conversation, and they're probably coming off the back of a couple-hour mortgage appointment."
When should advisers review income protection?
Page said life events that change a household's finances are the points at which cover should be revisited, echoing brokers who argue income protection has become impossible to ignore.
"Moving jobs, becoming self-employed, taking out a bigger mortgage, a bigger loan, having children, or seeing your financial commitments change can alter the financial resilience of that house," he said. "These are exactly the moments that really matter for those clients and when protection really should be then revisited. But protection isn't necessarily something you arrange once and then forget about it. It needs to keep pace with life."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
