The need for Critical Illness cover has once again moved into the spotlight on the back of crucial findings from Cancer Research UK. They now predict that 1 in 2 of the UK’s population will develop Cancer at some point in their lives. Combined with the ground-breaking advancements in treatment pushing cancer survival rates beyond the ten year mark for half of adults diagnosed, protecting your clients and advising them on Critical Illness cover continues to be an essential part of your role as an adviser.
Sadly, despite the numbers the UK is drastically under-insured. This month’s Insight into Protection will explore some of the big issues, providing you with some of the facts and advice to raise awareness and discuss protection with your clients. We believe that by working together, we can close the UK protection gap:
What are the Facts?
50% of the UK population will develop cancer
It is still so surprising how many of the general public are unaware of the real numbers surrounding Cancer diagnosis and survival rates. It is a difficult and sensitive subject to tackle, but whether it be through loved ones or personal experience, a large number of us will likely be affected by the disease. Sadly, it can often take a tragic occurrence to make us stop and think, which is even more reason to encourage your clients to approach Critical Illness proactively.
50% of adult cancer patients are predicted to survive 10 or more years
Cancer survival in the UK has doubled in the last 40 years, a clear indication of the steps we have made to battle this terrible illness. It is this crucial fact that will be pivotal to your client protection discussion. This is difficult, as most people instinctively protect material investments such as their home and goods. But they will also want to cover themselves against the most likely scenario, which means given the facts, clients will want to ensure they are financially covered.
UK Households spend just £7.80 a month on medical insurance
According to the Office of National Statistics, under £10 is spent a month per household on medical insurance, compared to £22 spent on household insurance. Research from a top provider also suggests that 5.2 million UK mortgage holders who earn an income have no plan or protection cover in place to cover their mortgage repayments if they become too ill to earn, another reminder of the current UK protection gap.
Why is the UK lacking Critical Illness Cover?
Protection myths
One of the most damaging myths surrounding Critical Illness is that providers go out of their way to ensure they do not pay out on an insurance claim. This could not be further from the truth. In fact, several providers have proudly released figures regarding their Critical Illness claims for 2014, showing pay-outs of over 90%. One leading provider even announced that over half of their 2014 claims were settled within 21 days, with the quickest taking just two days to process. Reasons for the rare instances of non-payment were non-disclosure of medical information and more commonly, instances where illness definition was unfortunately not met.
Consumer reliance on state support, employer or savings
Unfortunately, some consumers believe that the state would cover them financially if they were not able to work for long periods. But state support is there to ensure individuals are not immediately put in a desperate situation, it is not there to protect an established lifestyle and maintain the financial commitments that come with it. Incorrect assumptions on how long employers would provide full pay, or how long savings would last are also common. So take the time to use current figures and calculations to show your client the facts around financial protection.
What can you do as an Adviser?
Prove your credentials
Nobody wants to be scared into buying a protection policy. Use software and applications such as the CIExpert comparison, to show your client the true value of their policy, not just the priced premium costs. LV’s Risk Reality calculator is just one of many useful tools that providers offer, to assist you in the sales process and provide your client with the cover they need.
Recognise the principles of TCF (Treating Customers Fairly)
Ensure that in no circumstance are you placing profit before the client, as this is not adhering to the FCA guidelines on Treating Customers Fairly. Instead, ensure your client has every chance to be fully covered, by providing clear access to all policy options that protect them against any chance of future financial detriment.
Make sure your client is completely covered
Although Critical Illness covers your client in the event of many long term illnesses, there are several reasons why Income Protection, Life or better still, a combination of the three could be more beneficial to your client. So tailor the advice you give to suit your client’s circumstances. There are even flexible protection options out there that include care, support and child protection, providing an even more comprehensive package for your client.
As an adviser, you have a tough job competing with comparison sites battling to offer the lowest premiums. But by beginning the conversation with the facts, proving your expertise and showing you are treating them as an individual, your client can walk away knowing they have been given every chance to ensure they are protected in the event of developing and surviving a Critical Illness.
As an adviser running a busy business, finding the time to have an in-depth discussion with your clients about their protection needs can be a challenge in itself. But we believe that opening up an informed and honest dialogue with your clients about protection is about more than making the most of business opportunities, it is also about ensuring you are providing the right advice to your clients.
Whether you have already begun to make protection a major part of your business plans, or if you have not had the opportunity to think about it properly, we want to ensure you are equipped with the tools and guides to make the next step. Insight Magazine answers two of the most important questions an adviser will ask when contemplating selling protection:
“Why do I need to provide protection?”
To provide the most suitable advice for your clients…
Thoroughly going through protection options with your client proves your credentials as an adviser. Building trust comes from displaying a real belief in the purpose of your protection role: To provide your clients with the insurance advice they need to most effectively protect themselves against possible scenarios of financial detriment.
Looking back over your client base, how often does the client only opt for the protection option directly linked to taking out a mortgage? Protection should become a separate conversation, one that targets a different set of needs. We have an Insurance Recommendation Summary form on our broker website for just that purpose. To work through with your client, this is an important document that is used to evidence the conversation.
To make sure you’re Treating Customers Fairly…
One of the guiding principles of the FCA Sourcebook is for you to: “pay due regard to the interests of customers and treat them fairly’. You have a moral obligation to ensure your client has been given all the proper advice on what you can offer, how they can be covered and how little it can cost. So it’s not just about selling protection, it’s about staying compliant.
One of the most underused questions when discussing protection, is to ask your client whether they truly understand what is meant by: “Your home may be repossessed if you do not keep up with your monthly payments on your mortgage”. This can be a very effective tool to ensure they fully grasp the implications of suddenly being in a financial crisis. After all, your client is looking to build on their lifestyle, the last thing they would want is to go back a step.
To tap into an undersold resource…
The infamous protection gap in the UK is as big as it has been in years, with sources suggesting that it stood at an unfathomable 2.4 trillion pounds in 2014. This is testament to the attitudes regarding insurance for many people, as they prioritise how they spend their money.
But most forms of insurance are there to provide financial peace of mind. We believe that given a thorough and informed breakdown of how they spend their money compared to how much they spend on protecting themselves, many clients might soon change their preformed opinion on their insurance needs.
“What is the best way to discuss protection with my client?”
Empower your client with the facts…
There is no perfect solution to selling protection. But we believe that by equipping your clients with all the information, the tools and the advice to make their own decision, they will have every opportunity to realise how sensible a good protection plan really is.
Start off by asking the right questions: Do they know how the chances of developing a Critical Illness increases every ten years compared with the chances of death? Do your clients realise how lengthy financial processes can be in the event of a family member passing away? Do they know how much quoted premiums increase over time, suggesting a “wait till I can afford it” approach is detrimental to them financially?
But your client will also require hard facts to back this up and reinforce your assertion of their protection needs. Have factsheets and datasheets ready to produce that are catered for their situation, age and household circumstances. Clear infographics and charts are always a great way for clients to take the information on board. This can also include timescales regarding releasing finances, statistics around the probability of developing a critical illness, or current state payments for absence from work. People will always naturally want to protect themselves against the most likely scenario, which means given the facts, many would consider taking a protection policy.
Create a Menu Plan…
This is a crucial element of the protection dialogue you open with your client. Ensuring you always strive to offer the ideal world scenario or the ‘Utopian Version’ of protection is essential in complying with FCA guidelines. We encourage the creation of a comprehensive protection package for your client, where you can break down and individually discuss what each type of cover provides. Make sure you ask the right questions: Do they think they could live on their savings? How long would their employer provide full salary when they are off of work? Are they the sole bread-winner in the household?
This will allow you to segregate your client’s needs, so that each situation is covered on its own. This can then be collated to produce a full protection package for your clients. If possible, produce a professional and thorough family protection document for your clients to take away, in case they do not wish to make an immediate decision. You can always pick the conversation up another time with a follow-up appointment, which is protection-focussed and separate from the mortgage dialogue.
Make use of materials…
Lifestyle planners are another great way to discuss protection with your clients and to create budget margins to calculate expenditure. By breaking down what they spend on each luxury per month, you can work together to cut down on life’s little pleasures slightly, freeing up a surprising amount of money that they can spend on maintaining that lifestyle in the first place. Clients are often taken aback by how much they actually spend, which can open up more conversations around whether they actually need so much of a certain luxury. After all, many clients think about what they have “spare” at the end of the month, not what they have spent in the first place.
Some providers have bespoke toolkits available for downloading on their sites. These fantastic factsheets, planners and guides save you lots of time. There are even digital versions that can be worked through together live with the client. This can use quick calculations to produce financial solutions for your client, providing the most suitable advice on protection.
National Protection Sales Manager Bernie Buron wants to help you maximise your protection sales by recommending a holistic approach to offering and selling protection!
Step 1: “Make sure you introduce protection right from the start”
Plant the seeds right from the outset and make your clients aware that not only will you arrange their mortgage and help them buy their dream home, but you’ll also offer them the best possible protection of their lifestyle and their property should anything happen. Let them know it is your job as a responsible adviser to ensure they are given every opportunity to protect themselves should the worst happen.
When asking your clients to gather information such as bank statements and payslips, use the opportunity to inquire about any existing policies they may have, and any sick pay they may receive from their employers. This will spark the conversation you want and get the process of offering them comprehensive cover moving forward.
Step 2: “Make protection-only appointments”
Try and separate the conversations you have with your clients about their needs. This will allow you more time to focus on understanding you client’s protection concerns, what cover they may already have, and what the potential solutions are. An ideal time to have or book these appointments is around the AIP stage. With the mortgage process still in the early stages, the clients will be more receptive to talking about protection in detail, knowing there is a potential mortgage offer coming at some point.
Step 3: “Consider your Fact Find. Make your client’s needs a priority!”
Try and introduce soft conversational questions to get your client thinking about what could or would happen. For example:
“In what circumstances that you could imagine would you lose your home?”
“What financial impacts would mean you are unable to maintain your lifestyle?”
“If anything was to happen to you or your family, what lifestyle would you like to maintain?”
All these questions are designed to get the client thinking about protection. Don’t assume they have considered every situation, as many clients may have misconceptions and a lack of knowledge about the cost, effectiveness and necessity of protection.
Step 4: “Create bespoke protection portfolios”
Simply put: Build trust. No one wants to be sold to, so avoid the hard sell techniques associated with insurance. Instead, empower your clients with the facts, figures and advice thus allowing them to make an informed decision. Talking about protection does not need to only be about selling insurance. Instead, it should be a simple and responsible conversation. Talk to your clients in their language by asking them if they have thought about protecting themselves. They may not have given it much thought, considering that they are in the middle of taking out a mortgage.
Don’t try to be interesting. Instead, be interested in what matters most to them and make sure they understand you are simply being responsible by helping them to keep what they love and treasure. Creating bespoke protection portfolios with menu plans and quotes will show a commitment to caring and responsibility. This can go a long way to proving how seriously you have taken their protection needs.
Step 5: “Think like a dentist! Book follow-up appointments!”
Not every client will take your full recommendation and you may find a majority will only initially take out life cover on their mortgage. But don’t be perturbed by this as it doesn’t need to be the end of the road as far as protection goes. This could be the ideal client and the perfect opportunity to return to the conversation when the client has had time to reflect.
In other words, act like a dentist and look to book in a review meeting. As an example, call it a “protection check-up”, and commit to reviewing their situation in 12, or even 6 months’ time. This will give you the opportunity to discuss their protection portfolio directly with them and highlight gaps in their protection needs and requirements.
Follow these five simple steps and watch your protection sales grow!