Category: Insurance
One of the biggest announcements this year is the full integration of Friends life with Aviva, after Aviva’s original acquisition in 2015. This has been followed by a new range of flexible individual protection propositions for consumers. Aviva believes they have brought together the best from both existing propositions, developing an exciting suite of products and new added benefits.
What is Aviva’s Protect+?
Aviva has introduced a compelling package designed and shaped by the needs of the client. They recognise that changing client needs means more choice for a wider range of people. Their three new headline products are Aviva Life Insurance+, Critical Illness+ and Income Protection+. All these include a range of benefits and options that can be added to the standard products.
Aviva’s new support package of value added services is called Support Plus. For an extra monthly cost, your client can select additional covers and have the option to upgrade their critical illness cover for not just themselves, but their children as well.
What are the added benefits?
All clients taking out one of the new Aviva protection products will benefit from access to Support Plus and its range of added value benefits to help them through an already difficult time. These benefits include Second Opinion by Best Doctors, BUPA Anytime Health line and Counselling and Carer Support provided by Workplace Options.
For an additional cost, Aviva customers are also able to add global treatment or fracture cover to any of the three core products. Extra care cover can also be added to enhance critical illness cover.
National Protection Sales Manager Bernie Buron explains exactly what Total Permanent Disability is, as well as highlighting the importance of understanding when or why claims might not be successful
Claim success for critical illness, terminal illness, income protection and life policies, all boast an average pay out above 90%. Yet according to the Association of British Insurers (ABI), claims for Total Permanent Disability (TPD) in 2015 only averaged 66%. So why, despite the hard work advisers and providers are doing to create clarity and transparency on all types of policy, does TPD fall behind on claim success?
Although most definitions have been universally agreed, which has reduced the number of declined claims, there is still difficulty in proving whether a disability, as the name suggests, is “totally permanent”. This has unfortunately led to claims being made that did not quality for payment. This has cast TPD in a slightly negative light, despite how useful it can be for those looking for the most comprehensive cover.
What exactly is Total Permanent Disability?
TPD is normally an optional benefit which can be added to critical illness cover, if it is not already automatically included as part of the policy. TPD provides a lump sum if your client suffers an illness or injury that leaves them totally and permanently disabled.
Because the definitions of what is a total and permanent disability vary between providers, it is important to understand what situations are covered and which are not.
When would your client be covered?
TPD can often provide cover where critical illness can’t. Normally, providers require one of a certain number of definitions to be met in order for a TPD claim to be successful. This can either be based on the policyholder’s ability to continue their “own” or “any” occupation, or on the inability to perform certain basic tasks, such as bathing, dressing, eating and moving around.
TPD can also cover your client for loss of limbs or sight, as well as if they suffer cognitive impairment. But again, this can vary between insurers so it is vital to check cover options.
What is the difference between “own” and “any” occupation?
Own occupation means your client’s cover is only for their current role. This can often mean a more expensive premium, compared to “any” occupation. An example of this would be a surgeon with “own” occupation cover being able to claim if they lost the use of their hands. However, “any” occupation cover would likely mean they would still have options in the medical industry that do not necessitate the use of hands, such as becoming a general practitioner.
There are some situations where an illness or injury prevents your client from working, but is not necessarily permanent. An example of this might be a temporarily debilitating migraine which prevents them from working, but is very unlikely to be deemed a total permanent disability.
Income Protection as part of your client’s comprehensive cover will greatly improve their chances of always being covered, even if their inability to work is temporary. The most comprehensive cover can deliver peace of mind and protect your client under the most circumstances.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
National Protection Sales Manager Bernie Buron explores several ways advisers can help make Income Protection more affordable for clients
Affordability is still one of the biggest consumer objections when talking about any kind of protection, but income protection in particular is such an underused yet common sense approach to covering finances, that breaking down the affordability barrier is especially helpful for clients.
Helping clients visualise the situation they would be in were they to lose their income is such a useful way to break down opposition to affordability when taking out income protection. Comparing the swift and stress-free claims process with the laboured and unreliable state benefits system can also highlight why income protection is such a good idea. But even when your client has recognised the benefits and the risk a lack of protection can bring, affordability can still remain an obstacle.
So in your client conversation, how can you help your clients work within their budget so that they don’t leave themselves open and vulnerable to worst case scenarios?
Deferred periods can be extended to help with affordability
Extending the deferred period on a policy will normally reduce the premiums, as it reduces the risk of pay-out for the provider. Of course as an adviser your priority is to protect your client as far as possible, which means recommending cover that starts from the moment they are no longer fully covered by their employer. But if affordability is still an issue, extending the deferred period so that your client is at least in some way covered is an option, as long as it is recorded in your client conversations and on your Reason Why Letter.
Budget income protection is a possible option
Clients should always consider longer term income protection first, as this provides the most cover. But there may be circumstances where affordability has become enough of an issue for budget income protection to become an option. This option may also better suit those on zero-hour contracts and agency workers, as their employer most likely has no legal obligation to cover their income if your client was unable to work. Most providers will limit the pay-out time to 24 months.
Menu plans can help tailor protection to your client’s budget
Menu plans are available with most of the big providers and can be a really useful and convenient way to arrange all your client’s protection to suit their circumstances and their budget. Not only do they allow you to mix and match products and tailor protection to your client, but when it comes to claiming, having all their products with one provider can deliver that added peace of mind and convenience at a difficult time. Menu plans can also help advisers discuss options and maximise cover within the ascertained budget. If affordability is still an issue, you can record this and then discuss scaling back some of the benefits, whilst still maintaining the core cover products.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
National Protection Sales Manager Bernie Buron highlights some worrying figures surrounding a lack of protection for tenants
Concerning research from a YouGov poll has revealed that almost five million tenants in the UK have no protection of any kind in place to cover their rent payments if they became too ill to earn for three months or more. This is on the back of recent cuts to housing benefit, which means tenants and landlords are even less protected than before.
According to the YouGov survey commissioned by provider Royal London, over a quarter of tenants know someone who has struggled to pay the bills. But that was not the only surprise the survey revealed. More than a third of those surveyed also said that they had no idea how long they could survive on their savings, with 60% of people admitting they would only survive for three months or less.
Fewer than one in ten tenants in paid employment have even spoken to a financial adviser about their finances. Instead, the most common place they turn to for advice is family and friends. Debbie Kennedy, head of protection for provider Royal London Intermediary, highlighted that a raft of cuts to housing benefit meant that more tenants would not get their rent paid for if their income was suddenly reduced though not being able to work.
Experts predict that the private renting market will increase over the next 10 years, rising to 59% of 20-39 year olds. As the survey revealed that 39% of people would dip into their savings if they were struggling to pay the rent, it is even more important for tenants to protect themselves against the worst case scenarios, as all their hard work saving for a house deposit could be quickly undone.
Kennedy also warned: “tenants who assume that housing benefit will be there when they need it could find the reality is very different … Income protection may be more affordable than people realise and can provide a financial safety net and enable people to focus on getting better”.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
National Protection Sales Manager Bernie Buron takes a quick look at how budget income protection can form an important part of the client conversation.
A lesser-known part of income protection is low cost, or budget, income protection. This option can be really useful for clients to both afford protection, and to match a policy more suited to their circumstances. Although providers vary as to their policy options, they all generally limit the payments to 24 months.
Budget income protection aims to pay out a percentage of your client’s income on a regular basis for a shorter period than regular income protection policies. Because every client would be in a different financial situation as a result of being unable to work due to illness or injury, having flexible protection options to discuss with your clients is a great idea.
Who might need Budget income protection?
Even though most clients would need to consider long term income protection first, there may be circumstances that would be more suited to budget income protection. Affordability may also be an issue, in which case some form of income protection would be better than none at all.
People on zero-hour contracts or agency workers may benefit from discussing budget income protection, as their employer most likely has no legal obligation to cover their income if they are unable to work.
Most providers will continue to provide policy cover after the initial 24 month pay-out period has ended, as long as premiums are still being paid. The policy will continue to be live, and the client can claim again further down the line after an agreed period has ended.
What budget income protection options are there?
Although the maximum pay out time is limited to 24 months across the providers, there are options your client may need to consider when choosing their budget income protection policy.
There are two main types of policy option: deferred period and stepped benefits. Deferred periods are a common way to ensure the policy does not start paying out until they really need it. Having a longer deferred period often reduces the cost of the premiums.
It is important your client brings contracts, employer details and other information to your meetings, to ensure they fully understand when and how their employer would cover their income if they are unable to work.
Stepped benefits, also known as split deferred policies, are a good option that some income protection providers offer. In this case, the policy will provide a lower income after any deferred period ends, with a larger benefit paid after a second agreed deferred period. This can work really well for those whose employer pays a fixed percentage of the client’s income (for instance 50%) for an initial period, before withdrawing income altogether.
As with all forms of income protection, there are several circumstances which are not covered in the policy which you will need to discuss with your client. These can range from redundancy and unemployment to self-inflicted injuries.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
Head of Mortgages and Insurance Stephanie Charman takes a look at the new Flood Re scheme, designed to help make flood insurance more affordable for those in high risk areas.
Although an agreement was made between the Government and the ABI in 2000 to make flood insurance widely available across the UK, it did not take into account the affordability issues that recent large scale flooding has highlighted for those in high-risk areas.
That is why the Government has launched the Flood Re scheme, created to offer affordable flood insurance to more than 350,000 high-risk homes. Partly funded by a recent increase in insurance premium tax, the scheme went live as of 4th April 2016.
Scheduled to be in place for a full 25 years, a big part of the scheme will be to help people improve their understanding of their own flood risk level and whether they can help reduce the risk by taking action themselves.
So what will Flood Re do?
The government has confirmed that the scheme’s main goals are:
- Ensure affordable flood cover is available to households at the highest risk of flooding
- Increase availability and choice, including insurers and products, for consumers
- Level the playing field for new entrants and existing insurers in the UK market
- Increase the flood preparedness of authorities, insurers and communities
After some small businesses suffered affordability issues following the latest winter floods, the government is now also looking at a similar scheme to be available for small to medium sized enterprises as well as homeowners.
This is great news for so many clients that may have struggled to get flood insurance for their home or business because of affordability.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
National Protection Sales Manager Bernie Buron looks at whether advisers could be getting more out of administrators and paraplanners within the firm, whilst also highlighting what they generally can and cannot do.
I have had many enquiries from advisers asking exactly what an administrator/paraplanner can and can’t do within an adviser firm. This is an important question to ask, with many advisers rightly erring on the side of caution as to how best utilise administrators within such a tightly regulated sector. But with advisers so very busy at the moment, they are eager to ensure they are getting the most value out of their resource.
I already hear of success stories where the right set up with an administrator can be a godsend to advisers, especially during busy times. But it surprised me that some advisers do not even have an office administrator, and one or two are finding the workload becoming a big challenge.
So what can an administrator/paraplanner do?
Administrators, sometimes referred to as paraplanners, are utilised by a lot of advisers to free up more time to spend with clients. In some cases, opening up the admin role can even be a good way for them to become an adviser themselves through the firm, by learning more about the role the adviser does.
I have spoken to many advisers who have fully ensured their administrators/paraplanners are helping to free up time where possible, which gives the advisers in turn more time to spend with clients and deliver great advice. Here are just some of the ways that administrators have been helping out advisers with their protection, general insurance and mortgage business levels:
Freeing up time by chasing quotes | Handling general client queries | Preparing quotes ready for client discussion | General research on client cases | Calling the protection desk on behalf of the advisers | Underwriting and pre-underwriting | Retrieving and submitting Iress quotes | Chasing medical information from clients to receive the best terms
What can’t an administrator or paraplanner do?
What an administrator should not be doing as part of an adviser firm falls into two main categories:
Advising
Advising would include discussions of appropriate terms, rate type, best lenders, C&I vs IO, suitable amount of life cover, whether it is best to go pure life or relevant life etc. It is important to recognise when a role becomes advisory and ensure this is done by a qualified adviser. This includes certifying documents which must also be done by the adviser.
Fact Finding
Fact finding is slightly more difficult to define categorically, but collecting hard facts (name, DOB, address etc) is generally ok for administrators/paraplanners to do. However, retrieving softer facts strays away from what is allowed. This may include, but is not restricted to, asking a customer their view on interest rates or questioning how they intend to repay an Interest-only mortgage.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
Stephanie Charman takes a quick look at five of the most important tax and savings announcements to come out of George Osborne’s 2016 March budget.
The 2016 budget may have passed by without turning too many heads, but there were fact in some key changes worth noting:
Capital Gains Tax
The headline rate of Capital Gains Tax (CGT) is to be cut from 28% to 20%. CGT is an annual tax on the gain made from selling an asset (such as a person possession, second home or shares), which has gone up in value. It was also announced that the basic rate of CGT will be cut from the current 18% to 10% at the beginning of the new tax year. The reduction in CGT will not apply to residential property, which means the previous higher rates will still apply to gains from additional property.
Lifetime ISA
George Osborne announced the introduction of a new Lifetime ISA, to be launched in April 2017. This is to go alongside the Help to Buy ISA, which is available to help those saving for a deposit for a home. But the new Lifetime ISA, or “LISA”, can be used to save for retirement as well as a property, without paying tax on the interest earned. The new account is available to those aged 18 to 40 and offers a bonus of 25% on any savings, up to £4,000 a year, deposited before the account holder turns 50.
Tax Threshold Increase
One of the biggest announcements from the Chancellor was that the higher rate of tax threshold is to be raised to £45,000. This is a move surrounded by political controversy, especially in conjunction with the planned cuts in disability benefits. These changes are expected to save half a million people money, and are to be phased in to increase from £42,385 to £43,000 in 2016 and finally to £45,000 by this time next year.
Stamp Duty
As well as confirming the planned 3% stamp duty land tax (SDLT) surcharge on all purchases of additional homes, the government also withdrew the originally planned exemption for those with 15 properties or more. Osborne also announced that purchasers who move before they sell their main residence now have 36 months to sell and reclaim the extra stamp duty paid.
Personal Allowance
As well as the increase in the higher rate tax threshold, George Osborne announced that the Personal Allowance will increase to £11,500, from £10,600. This is the amount of money you must earn before you start paying income tax. The threshold will rise to £11,000 in 2016, eventually climbing to the new figure by April 2017.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
Head of Mortgages and Insurance Stephanie Charman highlights the main reasons your client’s home insurance claim may be rejected and the importance of getting to know their policies.
Research from the Association of British Insurers (ABI) has revealed that more than one in five home insurance claims are rejected. The figures have been published after an analysis of 1.8 million claims made during 2013 and 2014.
But under what grounds might your client’s claim be rejected and what can they do to protect themselves?
Wear and tear
The ABI stated that this was the main reason for home insurance claim rejections. If the policy holder fails to maintain the property to an agreed level, then this can lead to wear and tear that would not be covered.
Storm damage caused to a property’s roof might well be a valid reason to claim, but damage caused from a lack of repair may not be. In a nutshell, home insurance is there to cover clients in the event of a sudden or unexpected event such as a violent storm, not for the repair of property over time.
Claiming below the excess
One of the other reasons for invalid claims highlighted by the ABI, was when the value of the claim fell below the policy excess. The excess is of course the amount the policyholder must pay out when a claim is made.
Being tempted into increasing the excess when the policy is taken out in order to decrease the premiums might seem financially beneficial, especially if they don’t need to make a claim. But it can also increase their chances of non-payment when they eventually do, especially if the excess covers a relatively wide variety of circumstances.
The wrong level of cover
Unlike motor insurance which covers specific events and has a claim rate of 99%, home insurance often covers a number of differing circumstances. But it may also not cover damage from pets, to fences and boiler repair, which may come as a surprise to some.
Prioritising price, rushing through the application or even not reading the policy documents thoroughly when policies are taken out or renewed, can leave policyholders without the level of cover they thought they had.
Get to know the policy…
The ABI are using these statistics to raise awareness among consumers about purchasing home insurance and to help improve transparency and build trust. But it is still a complicated area. That is why talking your client through the options is important to ensure they have the right sort of cover for their circumstances.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
With National Storytelling Week in February, we spoke to appointed representative Caroline Hawkins about her involvement with charity Seven Families, who work to raise protection awareness among the public through telling real-life stories about those who have experienced the hardship of not having protection when it was needed most.
Caroline is an experienced independent adviser specialising in Business and Personal Protection and large loan mortgages. Working at appointed representative Direct Finance Solutions, Caroline prides herself on building long term relationships with clients over time, supporting them over the years with regular reviews and ongoing advice.
We spoke to Caroline about her involvement with Seven Families, the effectiveness of telling stories and the power of protection.
So how did you get involved with Seven Families, and how has it helped you promote the need for protection?
“As a protection adviser I have always ensured I maintain a strong presence not just with my clients but in the industry as well. This includes social media, which is a fantastic platform to get the word out and share stories. It was through LinkedIn, a very good social media platform for professionals, that I was contacted by a representative at Scottish Widows, who said that Seven Families were looking for an adviser who was passionate about protection and raising awareness to look after their seventh family, the Knights.”
“The client, Melanie Knight, had lost her job as a midwife with NHS in 2014 after prolonged absence due to arthritis. She was also diagnosed with Danlos syndrome, a disorder of the connective tissue affecting the movement of joints. Seeing the support of her employer ebb away was a painful process and it is a sad story that tells the tale outside of just the facts and figures.
“As soon as I was on board with Melanie I was able to help her with the life cover she currently had, as her provider offered access to Best Doctors. Often it is the knowledge of products and providers that makes the difference for clients, as they sometimes don’t associate the benefits of their life cover outside of the final pay out. Getting value out of their policies through ongoing support is all part of the service for my clients.”
How and why do you share stories with clients?
“I have my own personal protection story that I sometimes like to tell because it highlights not just the need for protection but also for the right advice. That is why I want to get it right for clients as much as I possibly can, because I know how difficult and stressful these situations can become. Good and bad news stories are important, to show the difference between being without and being with protection just when it is needed the most. The Seven Families story is a great example of this.
“One of the most important aspects of my job is to build long term client relationships built on trust. Not just as an adviser but as a professional friend that they can turn to for support. If a client wants me to find out more about their policy after they have taken it out, or has any other protection questions I always encourage them to call me.
“Stories can have a very powerful impact on people, sparking emotions and helping them to relate to the subject at hand. It is still important to discuss health risks and comparisons with state and employer support, but telling a story that you believe in or is close to your heart can have a real impact on clients, helping them to learn the lessons others have experienced in the past.”
We know that advisers take different approaches to protection. What techniques and formats work best for you and your clients?
“I know some firms prefer to have a protection specialist, or separate the protection conversation altogether. But I believe in letting the client know very early on in the process that we will be having a mortgage and protection conversation. I truly believe in treating customers fairly, and this means knowing your products and the providers well enough to have confidence in your advice and showing that you take it as seriously as any other part of the discussion. For me, it has always been less about selling a product, and more about helping the client protect themselves.”
“Understanding the benefits of each product is also a really important aspect of advice, and I have seen these added-value benefits make a big difference to people’s lives. Knowing which deferred periods are best suited to each client also delivers the best value out of the policy. It is after all a notoriously complicated market, which makes knowledge and understanding central to protection advice, especially as every insurer is different.”
What are the most common consumer objections that you have helped them overcome?
“Misinformation still sticks to the industry and it is surprising how many assumptions about employer and state support are made. Some people are simply not aware how long and painful a state claims process can be compared to a good value, comprehensive protection plan. I often ask clients how reliable they believe insurers to be and many assume it to be around the 50% mark, as opposed to the real figure which is normally above 90% reliability.”
“Sometimes clients just don’t know about protection at all so it is important to bring it up as soon as you can, letting them understand the benefits. More importantly, let them hear or see the real life scenarios that would leave them in a difficult situation, helping to break through the “it won’t happen to me” stance.”
Is it just as important to share stories between advisers and within the industry?
“Absolutely. It isn’t just about raising awareness and talking to clients, it is also about spreading the word and sharing stories between advisers within the industry or network. Whether through social media or face to face networking, I find that stories genuinely affect those I speak to. At networking events I enjoy standing up and speaking about protection, with profound effects on others who come up to me afterwards.
“Attending seminars and events featuring providers is an excellent way to build knowledge around protection, whilst staying up to date with all the latest innovations and changes. If you don’t believe in what you are selling, then clients will pick up on it and be put off. I use CI Expert as well, which is a very useful tool to compare and contrast policies and to talk about protection with clients, helping to find the right “fit” for their circumstances.”
Do enough advisers embrace protection?
“Many advisers really engage protection and are seeing positive results. But unfortunately there are some that are not as interested. I think this is a worrying trend considering the importance of Treating Customers Fairly. Even Business Protection is not considered enough which can be devastating for the parties involved when not discussed properly.
“Some of it is simply about confidence. If they do not feel they know the insurers and products well enough they might feel they cannot provide the best advice for their clients on the subject. But I believe advisers also have a responsibility to understand the industry and ensure the conversation is fully incorporated into advice. As some advisers simply don’t know how best to talk about protection, I do what I can to spread the word, share advice and most importantly share protection stories where I can.”
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.