As most mortgage advisers now recognise, discussing the need to protect mortgage payments and the client’s income is an essential, but not always straightforward, conversation to have.
It can be complex for all kinds of reasons. One of the main reasons is lack of trust – many people believe insurers go out of their way not to pay claims. This is the time of year when insurers begin to release their claims statistics for the previous year and the results are always far better than most clients expect.
British Friendly kicked off the year by revealing it paid 96.1% of all income protection claims in 2016. More recently, AIG announced it paid 95% of life claims and 92.3% of critical illness claims while Legal and General said it paid 98.6% of life claims, 95.9% for terminal illness, and 92.56% for critical illness.
The value of these stats isn’t necessarily to compare insurers and pick the one that pays a percentage or two more than the rest. The value for an adviser is that it provides the ammunition to dispel a client’s cynicism about the protection industry’s willingness to pay out.
Most insurers produce marketing material that explains in detail how much has been paid, why claims were declined, speed of payment and what conditions were most prevalent. Knowledge combats fear, so if you have a reluctant client, this information can help to persuade them that they aren’t wasting their premiums.
Already this year there have been changes to the government’s Bereavement Support system; a new product for people with HIV; upgrades to VitalityLife’s Serious Illness Cover and Scottish Widows’ Critical Illness product, to name just a few.
Over the coming months, I expect more product launches designed for specific types of health conditions and continuing improvements to existing products. This is all good news.
Complexity and an extensive range of good quality products means the adviser is adding value by helping the client to navigate this maze of choice. When protection is not your specialism, staying up to date on the changes and making sure you use all the tools at your disposal to reassure the customer is crucial.