A protection policy, whether it be life cover, critical illness or income protection, is often described as a financial safety net should illness or injury strike.
But in a cost of living crisis when anxiety and stress are rife, a protection policy can also offer a mental health safety net too.
More than half of UK adults (28.4mn people), were more anxious or stressed due to the rising cost of living, according to research from the Financial Conduct Authority.
But in addition to life policies, Royal London says added-value services that are available to policyholders could also provide a bridge amid waiting times to access an NHS service.
In February, nine in 10 referrals accessed NHS talking therapies for anxiety and depression within six weeks.
“[With added-value services] we’re building a bridge between where you are now, and maybe when you’re going to access a NHS service, or if you’re on a waiting list for something. It’s going to bridge that gap,” says Jennifer Gilchrist, a proposition specialist for Royal London’s protection business.
“The NHS has got waiting lists, [so] that bridge is really necessary. We want people to be supported, and not feel like they’ve got a gap until the help arrives.”
Indeed, separate research from the Royal College of Psychiatrists has found that two in five mental health patients (43 per cent) say the wait between an initial referral and second appointment, when treatment usually starts, caused their mental health to worsen.
Patients whose mental health deteriorated say it led to financial problems such as debt, struggles with work resulting in job loss, as well as relationship difficulties including divorce and family breakdown, the college added.
Income protection for mental health
When it comes to income protection, a specific condition is not required to make a claim, says David Banks, director of claims and underwriting at Legal & General Retail.
“Instead, a claim is dependent on being unable to work due to an illness or injury that has resulted in a loss of income. Any claim, including those for mental health issues, is assessed against that definition,” he says.
While income protection policies do not specifically identify what is and is not covered as such, Gilchrist says they do generally cover mental health, and that mental health is one of the top reasons for claiming under income protection.
Mike Farrell, protection sales and marketing director at LV, likewise says the insurer’s figures show that mental health issues are among the top three reasons for claims.
In 2022, mental health accounted for one in 10 of income protection claims at LV (12 per cent), after musculoskeletal issues (25 per cent) and cancer (20 per cent).
At Zurich, head of market engagement Peter Hamilton says the provider paid £6mn in income protection claims last year, of which a third (£1.91mn) related to policyholders claiming due to mental health.
