Advisers 10 best protection selling points

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1 Advisers 10 best protection selling points Every now and then it s nice to hear what people think the protection industry does well and how we innovate. By Kevin Carr Too often the protection industry focuses on what it could do better. That is no bad thing in principle, of course: all markets should strive to improve everything they do and the protection industry is no exception. But every now and then it s nice to hear what people think the protection industry does well and how we innovate. We asked a number of advisers who regularly write protection business to tell us what they find most impressive and rewarding. This are the arguments that advisers should be harnessing and using to sell protection to clients. From paid claims to simply doing the right thing, here are the best ten responses we had. 1. Supporting a client through a paid claim Perhaps an obvious answer, but without doubt the most compelling. Ensuring a client remains financially secure through an often devastating time is an incredible support. It enables the client to concentrate on their recovery or to lighten a grieving family s burden, avoiding potentially catastrophic financial situations. One adviser said: It has to be the huge sense of wellbeing and the deep sense of satisfaction you get in knowing you have had a positive impact on someone s life especially when you know a client wouldn t have taken a policy without your guidance.

2 This feeling is massively heightened when you receive that call. There s nothing more comforting or rewarding in financial services than knowing you ve made a hugely difficult and painful experience just that little bit easier for someone. 2. Add-on benefits Protection has moved away from being an industry that just supplies a claimant with a cheque. It has become an industry that offers a service. To quote a very old phrase: If you broke down on the M1 and the AA sent you a cheque you wouldn t be too pleased. Of course people don t want to get ill, but if they are they want to get better as quickly, painlessly and comfortably as possible. We have seen providers strengthen their added services over the years to now offer some invaluable benefits. This includes dedicated in-house teams of counsellors, rehabilitation specialists and medical experts to support claimants. Others offer outsourced services such as Red Arc support services, or best doctors. Red Arc states that a third of people who use their services are still benefitting from their support over a year later - and 90 per cent said services like Red Arc enhanced their view of the insurance provider. People are often surprised that insurers offer such support to them, in addition to paying their claim. To quote an adviser: We are genuinely helping people, families and businesses - not just funding them. That feels good. There are also many added benefits for protection clients not making a claim. Mutual insurers like LV= offer member benefits, including free advice on matters ranging from legal issues to relationship or bereavement counselling, and discounts on products such as car or home insurance. Other insurers such as PruProtect offer lifestyle benefits including gym membership and reward programmes for being healthy, to discounted family days out and free cinema tickets, giving people something tangible for their monthly premium. 3. Value for money On average the UK offers some of the cheapest protection premiums in the world. For a young family to cover the financial risk of suffering a major illness, dying or being injured in an accident the cost of protection is very accessible indeed. A very competitive marketplace has ensured that costs are driven down in consumers interests and protection often costs a lot less than people think. The average premium a customer of protection specialist LifeSearch pays is just 26 a month, a lot less than people presume cover costs. 4. Paid claim statistics

3 Recent figures from the ABI show that the protection industry pays out 6m a day in life cover, income protection and critical illness claims. Campaigns began for insurers to publish their claims data in around 2004, a time when the media seemed to be full of declined claims stories week in week out, damaging the public s perception of our industry. Today, the majority of providers publish claims statistics each year for life cover, critical illness and more recently income protection. This gives advisers the ability to show clients that the majority of claims are paid - around 90 per cent of claims are paid on average each year - and where claims are not paid, advisers can clearly explain why. This obviously helps clients see the importance of issues such as non-disclosure and understand better what they are and are not covered for. This has been a great step forward in our industry being more open and honest, enabling consumers to have confidence in us. 5. Multi-plans Scottish Provident was the first company to launch a multi-benefit protection plan back in 1999 and we ve seen many insurers follow suit since. Multi-plans have been a great addition to our industry, offering often a more cost effective and less time consuming process for the adviser and the client. If someone is taking out life cover, income protection and critical illness cover a multiplan means there is only one company to deal with, only one application to complete and one set of medical questions to answer, rather than repeating the process with a different insurer for each product. Newer developments have also seen tools arrive on the market to help advisers better research multi-plans on quote portals, rather than having to go to each insurer separately for information. Notably, Direct Life and Pensions LifeQuote and Capita Financial Software s Webline portals enable advisers to easily compare multi-plan quotes against standalone protection products. 6. New technology As one adviser put it: The best thing in protection recently is the CI Expert website. Quite simply it ensures a compliant client file and exhibits comprehensive critical illness cover research in a highly time-efficient manner. Further, it demonstrates value to the client by incorporating a level of analysis which is way beyond what they could undertake themselves. There are various new protection tools available for advisers, including placing policies in trust, IHT planning and the new claims statistics analysis tool from F&TRC. What seems to be certain, however, is that we are only just scraping the surface. Those in the know suggest the protection industry will see more new technology in the next five years than it has in the last two decades.

4 7. Advertising We commend the firms who promote protection to the public through advertising, and Aviva and Unum have stood out particularly. It is rare to see or hear good protection advertising on television and radio. The most common form is either celebrities endorsing over-50s plans, or stack-it-high-sell-it-cheap life cover. Advertising that aims to raise the profile and importance of a wider range of protection, including income protection and critical illness cover as well as life insurance is to be applauded, even if it turns out that it offends people watching Downton Abbey on a Sunday night. It certainly got people talking. 8. Severity-based cover One of the more common developments in the critical illness market in recent years has been the steady addition of partial payments by insurers. This is where an insurer pays a proportionate amount of the overall sum assured for conditions which are considered to be less serious than the fully covered definition. Early-stage cancers are perhaps the best example, where insurers will pay in the region of 20 per cent of the full benefit amount for early-stage breast or prostate cancer, which traditionally would not have been covered. A useful analogy when initially discussing partial payments can be that you do not receive enough money for a new house if the kitchen floods, or likewise enough money for a new car if the windscreen breaks. So why should critical illness cover be any different? If someone is ill, receiving something is almost certainly better than nothing in most people eyes, and provides a relevant benefit at a difficult time rather than potentially declining a claim altogether. Moreover, allowing partial payouts alongside full payments means full potential cover can be significantly higher than the original sum assured - under a policy from LV= up to 200 per cent of the sum assured can be claimed. 9. Our passion It was noted by many advisers that we are lucky to have some very passionate people within the protection industry. They have helped drive the protection market forward to make it what it is today - and continue to challenge us to make it impossible to rest on our laurels. From adviser firms, to insurers, consultants and industry bodies, they all contain people that passionately care for making the protection industry better for consumers, and we must thank and applaud them for their energy. 10. It exists

5 The best thing about the protection industry is that it exists. We should be glad there is a method by which an individually insurmountable risk can be mitigated by spreading it across thousands of other like-minded individuals to become affordable, which isn t the case in every country around the world. Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting