"While it can be a difficult topic when they’re feeling more immediate financial pressures, reminding clients that protection products are designed to increase their financial resilience is one of the best ways to contextualise protection and reassure clients of the long-term value of cover."
- Jeff Woods, Legal & General head of intermediary development
Families are in the precarious position where a squeeze on earnings could cause them to question the affordability of protection premiums, while an actual loss of income would place them closer than ever to the breadline.
Cancelling cover is always an unwise decision when these products could provide a financial lifeline for a family if the worst was to happen. However, it’s understandable that many people are reviewing their monthly outgoings and questioning how essential ‘intangible’ expenses like protection premiums are in the wake of rising rates.
In this situation, intermediaries play an essential role in communicating the benefits of protection. Firms are finding themselves in a position where their ongoing prosperity and survival is explicitly linked to the balance between a steady stream of new business, and their capacity to retain existing clients – ensuring each group receives the appropriate time and attention.
A key factor for intermediaries to consider is that protection is not ‘one size fits all’. Ensuring a tailored product with appropriate premiums can be the best way to make clients feel comfortable. It’s essential to remind clients of the importance of financial resilience and that protection premiums are an integral element of their capacity to cope with unexpected financial shocks.
Across the industry, cost-effective income protection is available for as little as £6 per month, and intermediaries should assess on a case-by-case basis whether suggesting a reduced premium package is appropriate to retain a client’s business.
While it can be a difficult topic when they’re feeling more immediate financial pressures, reminding clients that protection products are designed to increase their financial resilience is one of the best ways to contextualise protection and reassure clients of the long-term value of cover. This approach can also be a useful tool when engaging with potential new business.
Intermediaries need to elevate the status of protection from ‘passive’ to something which provides day-in, day-out peace of mind, whilst also offering additional wellbeing benefits. Each client conversation should be unique, and intermediaries must avoid slipping into ‘solution’ mode too quickly by bringing up specific products.
Exploring the client’s needs is the priority and getting them to question how they would cope if they were unable to work for an extended period will illustrate the value of cover for their own lives. One beneficial tool is the Association of British Insurers’ (ABI) Percy The Protection Calculator, which puts a client’s income, sick pay benefits, savings and any existing income protection policy into a graph, detailing how long they’d be supported if they were unable to work for an extended period of time.
Intermediaries should also draw on the experiences of their friends and family members who have benefited from protection to humanise discussions around specific products. It's also essential that protection isn’t seen as an ‘add on’ product when discussing mortgages. It should be proactively raised as a serious consideration for all current and prospective clients, no matter their stage of life.
Good client outcomes must be the priority for both intermediaries and insurers. Providing a valuable service through tailored and frequent communication, and ensuring each client has the most suitable products for their personal financial situation is essential.
Intermediaries should be signed up to early warnings if a direct debit for a premium is missed, allowing them to reach out to a client in a timely fashion to discuss the different options available to them.
Ultimately, intermediaries can approach the Cost-of-Living crisis as an opportunity to communicate how protection is more relevant than ever for the financial resilience of individuals and their families. If intermediaries can continue tailoring communication and reiterating the value of cover, then the industry can flourish, ensuring fewer people go unprotected.