Can I take out income protection without advice from a broker?

svt123

Hi all,

I'm currently applying for a mortgage, and my broker is recommending to take out income protection (and hard-selling quite a bit for the L&G one). 
My work doesn't have long-term income protection, and so I would like to take out income protection. Am a first time buyer as well.

My broker mentioned however that I wouldn't be able to take out income protection without advice. Is this true? I've never heard of this before, and there's plenty of offers online that I've done quotes and nothing has ever said that I need advice to get income protection in order to apply for one, or am I wrong?

Just wanted to a sanity check, as I've never got income protection before and don't know what the process is. Thanks.

DullGreyGuy

The problem is "income protection" is a marketing name for two and half different products.

AS/ASU/PPI is commonly sold as Income Protection ever since its technical name became toxic. Its a short term policy that may fall away at any point and premiums are reviewable annually. Policies normally only pay out for 12 - 24 months and then stop

PHI is the other major form sold under the income protection name as its technical name confuses people. Its a long term policy who's cover will continue as long as you keep paying and normally are guaranteed premiums of either fixed or indexed. The original version of this pays out until the end of the policy which potentially could be 30 years plus. The "half" is that a lite version of this has sprung up in recent years which pays out for a limited time period of 2 years or such.

 You certainly can buy some forms of income protection on a non-advised basis, particularly the PPI and PHI Lite. There are certainly many PHI full fat versions that are limited to brokers and IFAs.

Any particular reason for trying to avoid an advised sale?

dunstonh

I'm currently applying for a mortgage, and my broker is recommending to take out income protection (and hard-selling quite a bit for the L&G one). 

Is the adviser an independent/whole of market for insurance adviser or a tied sales rep of L&G?

A lot of estate agents are tied reps of L&G.  That may explain the provider choice. Although L&Gs products are better quality than they used to be.

My broker mentioned however that I wouldn't be able to take out income protection without advice. Is this true?

Whilst not a regulatory requirement, most providers when it comes to Permanent Health Insurance (PHI) do not retail their products direct to consumers or via comparison sites.   There are a handful but not many.

 I've never heard of this before, and there's plenty of offers online that I've done quotes and nothing has ever said that I need advice to get income protection in order to apply for one, or am I wrong?

Are those you are seeing online PPI or PHI?  Comparison sites, for example, tend to retail PPI or a cut down version of PHI designed to be bought on comparison site.    You don't often see the decent plans on them.

Maybe it would help if you named some of these plans you are finding to see whether you are looking at PPI or PHI plans.

svt123

DullGreyGuy said:

The problem is "income protection" is a marketing name for two and half different products.

AS/ASU/PPI is commonly sold as Income Protection ever since its technical name became toxic. Its a short term policy that may fall away at any point and premiums are reviewable annually. Policies normally only pay out for 12 - 24 months and then stop

PHI is the other major form sold under the income protection name as its technical name confuses people. Its a long term policy who's cover will continue as long as you keep paying and normally are guaranteed premiums of either fixed or indexed. The original version of this pays out until the end of the policy which potentially could be 30 years plus. The "half" is that a lite version of this has sprung up in recent years which pays out for a limited time period of 2 years or such.

 You certainly can buy some forms of income protection on a non-advised basis, particularly the PPI and PHI Lite. There are certainly many PHI full fat versions that are limited to brokers and IFAs.

Any particular reason for trying to avoid an advised sale?

Thanks for the explanation! No reason for avoiding the advised sale, just that their company partners with L&G and wanted to make sure it wasn't just a hard-sell from my broker. They didn't explain the difference between PPI and PHI, but your explanation makes things a lot clearer, as they probably meant the full fat PHI and not PPI which is what I have been seeing on comparison sites.

svt123

dunstonh said:

I'm currently applying for a mortgage, and my broker is recommending to take out income protection (and hard-selling quite a bit for the L&G one). 

Is the adviser an independent/whole of market for insurance adviser or a tied sales rep of L&G?

A lot of estate agents are tied reps of L&G.  That may explain the provider choice. Although L&Gs products are better quality than they used to be.

My broker mentioned however that I wouldn't be able to take out income protection without advice. Is this true?

Whilst not a regulatory requirement, most providers when it comes to Permanent Health Insurance (PHI) do not retail their products direct to consumers or via comparison sites.   There are a handful but not many.

 I've never heard of this before, and there's plenty of offers online that I've done quotes and nothing has ever said that I need advice to get income protection in order to apply for one, or am I wrong?

Are those you are seeing online PPI or PHI?  Comparison sites, for example, tend to retail PPI or a cut down version of PHI designed to be bought on comparison site.    You don't often see the decent plans on them.

Maybe it would help if you named some of these plans you are finding to see whether you are looking at PPI or PHI plans.

Thanks for the insight - did a little bit of Googling and it seems like the estate agent/broker are all part of a network that connects to L&G, so it seems like they are all connected/partnered together in some way. Not that I have anything against L&G - I know they have good products. My broker ran through the policy with me and what they offered was indeed fantastic. Just wanted to double check as it was on the pricey side, and didn't realise why.

The one my broker quoted for me was definitely a full PHI - hence the priciness, while the ones I'm seeing on comparison sites are PPI/cut-down versions of PHI (and very cheap). But that explains a lot.

Thanks both

kingstreet

An intermediary who is independent can usually source L&G cover cheaper than a tied agent. The latter can often negotiate higher commission based on loaded premiums in return for the tie. An independent can also compare cover/providers and find you the best terms as well as the lowest premium.