Yet, only one in 10 adults have some form of protection, while nine in 10 mortgage brokers believe they don’t sell enough of the policies, according to research.
We asked this week’s Markewatch panel why brokers aren’t selling more protection and how the gap can be improved.
Sharif Muhashash, broker at Greendoor Mortgages
We are constantly being reminded by our networks and the protection providers that there is a huge hole in clients’ protection cover, and I am sure all brokers would like to sell more and protect their client’s families should the worst happen.
But what’s stopping them? I think there are a number of barriers.
One is cost. Some advisers may think clients won’t take the policy as its going to be too expensive, so don’t offer it.
Alternatively, the clients may be offered the policy without explanation and go for the cheapest option, thus reinforcing the adviser’s perception that the more comprehensive policy was unaffordable for the client.
Client trust could also be an issue, as many don’t want to pay for a policy that they believe will never pay out.
Complexity of the products can make the market hard to understand – every policy is different, and every provider has a different offering and niches.
Applications can also be long-winded and awkward health questions can be difficult or time-consuming, which means it can be easier to sell very basic policies.
The good news is that networks and protection providers are aware of the issues and have helpfully over the years developed tools and sales aids to try to help.
I find the best way to protect more clients is to understand the products more closely and use these sales aids and my own fact finds to identify clients’ needs and address them.
By attending seminars, webinars, roadshows, roundtables and meeting with BDMs, also increases understanding of the products on offer.
And by using the sales tools and literature with clients help them understand true benefits of proper and full protection.
For example, the LV income protection shortfall calculator and the Royal London lifestyle calculator are both great tools to help bring protection to life for clients.
With the help of the protection providers, we can help our clients understand the importance of getting the correct cover that they truly value at a price that is affordable.
Financial advisers know just how important protection is, but sometimes it can be a difficult subject to tackle with clients.
Selling protection successfully requires knowledge and skills, as well as getting into the habit of discussing protection with every client.
All too often, protection is the last point of discussion in a conversation, making it even harder to sell.
Often, clients may simply not understand the different protection products available and how protection can help, and this is where advisers have a vital role to play.
Being prepared and equipped to tackle conversations with confidence is more important than ever for advisers looking to offer a holistic service to their clients.
Life, critical illness and income protection all have a role to play in protecting clients and are complementary, and an adviser with the knowledge and confidence to explain this clearly to clients upfront has a head start.
Income protection is the protection product least likely to be recommended by advisers, although it is the most likely to be claimed on.
Clients may feel they need either income protection, or critical illness cover.
It can be helpful to highlight here that critical illnesses often aren’t a one and done affair – and that the effects can last for months which can in turn impact a client’s income.
One effective way of broaching the protection conversation is to assess outgoings using the client’s bank statement, and to establish with them where they could free up money to cover the cost of their protection requirements.
Sending out a budget planner ahead of the meeting means the client can do some of the hard work beforehand, so there is more time to focus the conversation on their protection needs.
Clients should also be advised to check what their employer offers and what gaps there may be in protecting income. And having case studies and examples ready to show the difference protection has made to others can also be useful.
In today’s mortgage market, advising on and processing a mortgage is often admin heavy and tends to need a lot of client and adviser involvement.
The mortgage broker is focussed on getting enough information to achieve a successful mortgage outcome and somewhere along the line, protection may be proposed as an option for the client to take.
I believe there are three areas which can improve protection uptake massively.
Knowledge: Know your product, understand how it works and under what circumstances a claim can be made.
You need to have confidence in knowing your product otherwise it will come across in your presentation and credibility will be lost.
Process: The fact find should be structured to understand more than just their current financial position.
Understand what they earn, but also how it is broken down and how long they will continue to earn if they, for example, became ill.
Bespoke solution: Helping a client to understand that as an adviser, you not only want to help them achieve their dream home, you want them to keep it no matter what.
If your process helps to understand when funds will run out and when, you can tell the client your price breakdown will include the amount it will cost to keep your house should they fall ill or worse.
If your client challenges this then you have the ability, from your process and knowledge, to back up why the protection is always a necessity not a luxury.