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SUPPORTING ADVISERS SELLING BUSINESS PROTECTION: WHO OFFERS WHAT?

SUPPORTING ADVISERS SELLING BUSINESS PROTECTION: WHO OFFERS WHAT?

Selling to businesses often raises the stakes for advisers. Yes the problems, premiums and income are often bigger but it’s probably fair to say that businesses will have a high expectation of quality advice and an easy process. So it’s important for advisers to know what support they will get from an insurer before they place new business protection cases with them. The tools, resources and standard of service that advisers receive from insurers will impact on clients so if adequate support is there, it will make a good impression. However, a lack of support which leaves the adviser struggling to assess the value of a client’s business will not go down well and clients will ultimately vote with their feet. In this article we examine the support advisers can get from providers for business insurance cases

Key person insurance helps to protect businesses from the financial impact of an important person in the business being diagnosed with a critical illness or dying. Broadly speaking, businesses take out a policy on the life of the key person, or the key person takes out a policy on their own life, which is then placed in trust. If the key person becomes critically ill or dies, the pay-out from the insurance policy can be used to tide the business over while it adjusts or looks for a temporary or permanent replacement.

The legal structure of a business and the role of the keyperson within it – whether they are an employee, partner or shareholder, for example, will determine what type of policy is most suitable and how it should be set up. Knowledge of different types of trusts, accounting practices and the tax system is necessary, making it very technical. This is why some insurers have technical experts on hand to help advisers and make it easier for them to sell business protection.

One of the tools that insurers lay on for advisers who sell business protection is the calculator. As our chart shows, the majority of insurers give advisers access to different calculators.

A relevant life cost saving calculator, which shows the savings that could potentially be made if a client chose a relevant life plan instead of a personal life policy, is offered by seven out of 8 insurers. 

Most insurers also provide advisers with business valuation calculators to work out how much a client’s business is worth. The exceptions are Aviva and VitalityLife.

A Key Person calculator helps advisers understand the value of a key person so they can work out the sum assured. However, this is not something Aviva and Zurich offer advisers. Zurich and AIG also have no premium equalisation calculator. This tool helps advisers understand how shareholders can split premium payments according to their shareholding.

A specialist business protection support team is the norm for all insurers in our table and these teams largely have the same skills, including senior level underwriting and a detailed understanding of trust law, corporate law and corporate tax.

But the allocation of cases to one member of their support team, meaning the adviser will have the same point of contact throughout the new business process is split 50/50. Legal and General, Royal London, Scottish Widows and VitalityLife offer this service, however, AIG, Aviva, LV= and Zurich do not work this way, so the adviser may need to speak to different people.

Business protection can be very technical, so advisers will be pleased to know that all insurers will provide them with relevant training through a mix of fact sheets, case studies, webinars and roadshows. Online video training is provided by most insurers, with the only exception being Aviva.

The topics that the training covers appear standard across the board. All providers include positioning business protection to potential clients, and what the different types of business protection are and when to use them. Using different types of trust and generating business protection leads are covered by all the insurers listed in our table, whilst everyone except Aviva will look at understanding company accounts.

The good news for advisers who undergo the training laid on by insurers is that it is accredited for common professional development (CPD) by the Personal Finance Society or the Chartered Insurance Institute in most cases. However, some elements of VitalityLife’s training and the training offered by LV= will not qualify for CPD.

AIG
Aviva
L&G
LV=
Royal London
Scottish Widows
Vitality Life
Zurich
Preferential service standards
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
If so, sum assured dependent?
Yes
Yes
Yes
No
No
No
Yes
Minimum sum assured to qualify
Over £1m
£500k
£600k (Life) / £350 (CI)
N/A
N/A
N/A
Over £1m
Initial underwriting within
24 hours
24 hours
24 hours
24 hours
24 hours
48 hours
24 hours
Subsequent medical info actioned within
24 hours
48 hours
48 hours
24 hours
24 hours
48 hours
24 hours

As our table shows, it is common for insurers to offer preferential service standards to business protection cases. In most cases this will depend on the sum assured. Where this is the case, at £500,000, Aviva has the lowest minimum sum assured to qualify in relation to Key Person life cover.

In contrast, Key Person critical-illness cover with Legal & General qualifies for preferential service standards at a much lower level, £350,000. Three insurers – LV=, Royal London and VitalityLife – don’t have a minimum sum assured to qualify for preferential service standards.

Our tables also show that turnaround times may vary between providers. Most will complete the initial underwriting within 24 hours, but Scottish Widows work to 48 hours.

When clients need to have a medical examination, all insurers provide propriety medical services as you would expect, with flexible appointment times that can be outside usual working hours.

All insurers allow the client to choose where to have their medical and give them a courtesy call to explain what will happen and what they need to bring to the appointment. However, providers take different approaches to what happens afterwards. Many provide clients with a summary of the screening at the end of the examination, but Aviva and LV= do not.

Most providers are fairly good all-rounders in supporting business protection advisers, from training to calculators. However, Royal London deserves credit for ticking the most boxes and is one of the insurers who does not have a minimum sum assured for preferential service standards.

LV= and VitalityLife also do this but do not stand up as well as Royal London in other respects. VitalityLife has no business valuation calculator and not all of its training qualifies for CPD. Similarly, the training provided by LV= does not qualify for CPD; neither does the firm provide clients with a summary at the end of a medical examination.

About The Author

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As well as writing for Protection Guru, Amanda Newman Smith is the feature writer at adviser trade publication Money Marketing. She started her career at a local newspaper in London and has been writing about protection products since 2000. In her previous role at Money Marketing she specialised in analysis of new financial products, including those in the protection market. Having recently become interested in antiques, Amanda spends her free time with her husband and their three children, hunting for unloved pieces to restore to their former glory.

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