About the market:

Individuals fall into debt for reasons such as long-term illness, accident, over-commitment, job loss or relationship breakdown. While these common events may seem inevitable, in the light of day consumers tend not to perceive the risk of long-term incapacity as clearly as they perceive the risk of short-term incapacity or short-term unemployment. Accordingly, accident sickness and unemployment (ASU) insurance (also known as payment protection insurance) appears to be more popular than IP with consumers. However, ASU offers time-limited (usually a 12-month term) cover and this is one issue on which IP may be seen as more appropriate for the majority of consumers.

Traditionally, income protection has been outsold by similar protection products such as critical illness cover (CIC) and ASU insurance. However, IP does not just sit in the protection group of insurances since it offers long-term cover.

Product complexity and underwriting issues are often said to be the key reasons why IP insurers experience sluggish sales. In 2005, industry and regulatory initiatives partly cancelled out these arguments, and should see all protection insurances sold more transparently and effectively.