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Photo: Liv Bruce on Unsplash

Income protection gap


Our Income Protection Gap (IPG) project investigates the drivers of under-protection in insurance, where a household is dependent on replacement income during an unplanned interruption to earnings. We are exploring the shifting balance of financial responsibility from institutions to individuals, and the behaviours associated with household financial decision-making.

Our work

The ability to ensure financial security during crises such as long-term illness or disability is vital for our personal security and the future of our families. This brings opportunities for governments, employers, insurers, and individuals to work together. Our recommendations to solve income protection gaps are:

  • For insurers: Develop basic insurance products for employers to introduce under auto-enrolment, with additional features if individuals wish to purchase them.
  • For employers: Enrol the workforce in contribution-based income protection insurance schemes as part of their employment contracts. Provide employees with ongoing financial education and training.
  • For governments: regulate and certify approved IPG insurance products and use fiscal incentives to encourage compliance. Extend obligations to information technology-based platforms and agency workers.
  • For individuals: personal experience of IPGs is a bigger influence on demand than financial literacy. Most people believe income protection insurance costs are higher than they are often are in reality. The rise of the sharing economy is putting more individuals at risk, and older workers are more likely to lack protection.
  • For insurance distributors and intermediaries: agents, brokers, banks, employee benefits consultants and others have important functions, advising and educating customers, and feeding market and customer requirements back to insurers.

Employers have a central role to play in helping to make their employees more resilient to income loss. We propose simple solutions, such as:

  • Enrolling the workforce in contribution-based income protection insurance as part of their employment contract
  • Providing employees with ongoing financial education and training to equip them with the practical knowledge and skills they need to make informed choices
  • Offering health check incentives to employees 
  • Promote healthy lifestyles in the work-place by incentivising healthy choices such as having regular health checks, exercising and eating well.
  • Dr Sarah McGill
  • Prof Noel Whiteside
  • Prof Juncal Cuñado Eizaguirre
  • Jakob Engel
  • Dr Irem Kok
  • Theodor Cojoianou
  • Dr Michael Viehs
  • Dr Maurizio Fiaschetti