For our July Protection Forum we brought together advisers and insurers to discuss protection insurance and the cost of living crisis.
For our second session we focused on how we can ensure clients remain protected and don’t cancel their cover, when protection insurance may be seen as some as an unnecessary luxury. This is a particular concern at the moment, highlighted very recently by the FCA’s Sheldon Mills, who warned that the cost of living crisis could force consumers to cancel valuable insurance products.
There are numerous ways of approaching and tackling this potential issue, from product flexibility such as payment holidays, to the close contact advisers maintain with their clients throughout the term of the policy.
The risk that we always face as an industry compared to other financial products is that clients see an amount of money leave their account each month and at some point in time they think “I don’t need this anymore. I’m still alive. I’ve not fallen ill. I’m not dead yet. It’s a waste of money”. There’s a lot that we need to think about in how we keep those policies live.
We kicked off the session hearing from Protection Guru’s Rob Harvey, himself a former adviser at protection specialists Drewberry. Rob shared some of his thoughts and concerns around the risk of client lapses and how advisers can get on the front foot through client engagement, particularly highlighting why their protected and the value of protection.
We then heard from a range of industry experts, including CoverMyBubble’s Emma Astley, Fabio Testa from LifeSearch, Luke Ashworth founder of Adviser.ai and Roy McLoughlin of Cavandish Ware.
Whilst the session initially focused on what advisers and the wider industry can do to ‘save’ policies, the focus quickly shifted to the importance of the fact-find process in ensuring the client is fully bought-in in the first place, and is therefore less likely to view their cover as an unnecessary expense during the term of the policy.
Full session audio
The way to get clawback down is not to save it. The problem is too late by then. But if you sell it properly in the first place, you don’t need anything else. Because of course [the client] needs this product in case [they] die or in case [they] get critical illness.
A lot of the things that we can do to mitigate against [cancellations] are done in that initial advice. Getting to that spot on is so important…There are a lot of vulnerable families out there who will feel the squeeze… It’s really important that we look back at the fact finds that you’ve done initially and understand the purpose of why [the client] took out the cover. Was it for children? Was it for a mortgage?
I think trying to give that family a third option and a way out to say, “look, let’s see if we can trim the costs down slightly for you. But you said to me that your children are the most important thing. Well, let’s keep the family cover going”. Or “you still have your mortgage and you still need to pay for that. Let’s keep your income protection policy in place, but maybe less adjust the benefit in some way”. Take your time. Always refer back to the original facts and the details that you took the time to collate in the first instance and almost use that.
