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Ask the Experts: How can providers make protection easier to understand?

by: Mark Jones
  • 12/05/2014
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Ask the Experts: How can providers make protection easier to understand?
Our Ask the Experts column is your chance to put industry figures on the spot. In this edition Mark Jones, head of protection at LV=, answers your question.

Q: Customers find it difficult to tell between different insurance and protection products, even after advice. What are providers doing to make their product ranges easier to understand for consumers?

A: The protection landscape may seem difficult for clients to navigate: income protection, whole of life, critical illness, term assurance, which product or combination of products would be the most appropriate for their individual circumstances?

Arguably it is income protection that is the most relevant cover for working adults, however, according to industry figures; life cover policies outsold income protection policies by nearly 12 to one last year.

Over the last 12 months we have seen the introduction of various simplified protection products to the market place. These products aim to make the purchasing of protection more straightforward for consumers.

Providers are encouraging consumers to buy protection by introducing targeted products. Last year LV= launched a simplified income protection product called ‘Sick Pay Insurance’ aimed at people aged between 17 and 45 who do not traditionally seek financial advice.

ask-the-expertsThe cost of cover is the same for everyone, and the amount of cover people can take out is based on the number of hours they work.

There are also numerous short and long-term protection products available in the market, meaning there are options to suit every budget.

However underwritten products are still the choice of the majority as they are more tailored to individual needs. Of course, prior to purchasing, clients need to understand when their chosen policy will pay out and for how long.

Providers are working closely with advisers to help them explain the different protection products available to clients and in particular highlight the importance of income protection. One of the barriers advisers face when selling protection is that clients often say they don’t have anything to protect because they aren’t married, don’t have a family nor own a house.

Regardless of whether a client has a family or owns their home, advisers can highlight that income protection should be considered as the policy that can safeguard their current lifestyle if they were off work for a long period of time.

Statistically a client is much more likely to suffer an illness which prevents them from working for two months or more than to die before they retire. Whilst no one likes to think of themselves breaking down, unfortunately none of us are invincible.

Providers have developed numerous tools, including interactive budget planners and risk reality calculators to help advisers demonstrate the importance of protection to clients. These tools are designed to illustrate the real risks a client faces in order to focus the conversation about protection to an individual’s needs.

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