The price of protection products has been falling for years due to increased competition between providers. However, with the EU Gender Directive coming into force in December, the cost of life insurance for women is set to rise by around 15%.
While on the face of it, this doesn’t appear to be good news for the industry, it actually offers a fantastic opportunity to get the message out to female clients that protection is a must-have product and to buy now before costs increase. It also gives advisers the opportunity to revisit existing clients whose circumstances might have changed since they last reviewed their mortgage and protection needs.
And the good news is, providers have produced some excellent sales aids and marketing material to assist advisers with the protection sale, with particular emphasis on the Gender Directive and why women should buy now before the price goes up. Many women undervalue the levels of protection they need compared to men. This is despite the fact that an increasing number of women are now the main earners in the family and responsible for making the household’s financial decisions.
In many ways the economic downturn has made people think more seriously about their financial responsibilities. And we should certainly be making the most of this increased awareness to ensure people are financially protected against loss of income due to illness or accident. The bottom line is that for the vast majority of people, their spending power comes from their income. It pays for the mortgage or rent, the bills, the school uniforms and holidays. But many are still reluctant to protect that income. Why is this? A lack of understanding about protection products and thoughts that it is too expensive will put many off. But people need to have a serious think about how they would cope if suddenly there wasn’t a salary coming in each month.
The cost issue is an understandable one when many are already struggling with their day to day expenditure. In the past, most protection messages have been around providing a lump sum to clear a mortgage or to replace a breadwinner’s salary in its entirety. In the current economic climate, however, smaller amounts of cover that are affordable can make a difference.
Suggesting to clients that they take out £20,000 worth of critical illness cover or £10 a month worth of life cover are preferable to having no cover at all. Redefining critical illness cover so that it is an emergency fund covering one year of salary means that customers are less likely to be scared away by the price. And it won’t just be the client who benefits. Adding a smaller amount of critical illness cover to every life cover plan will also create extra commission for advisers.
Many people take good health for granted but we never know what’s around the corner, as Bright Grey’s claim statistics show. With the youngest claimant just 23 years old having suffered a stroke and nearly half of claims made by people who were 40 and under, where a critical illness is concerned there is no discrimination. Encouraging younger people to take out protection insurance can be challenging but if they understand that the younger they start a policy the cheaper it is they may be more inclined to see the benefits.
It’s impossible to predict when a serious illness or accident might strike but with some professional advice from an adviser it is possible to be prepared financially.
