Most people want to ensure that if anything happens to them, their family will be protected. Your advice can help.
More shocking when you consider the average family and how much it costs to keep them going. A house, a car or two, annual holidays, the odd weekend break, social outings – not to mention everyday expenses like utility bills, food, clothes and travel costs. It all adds up to a substantial amount of money each month.
With no protection in place, most people would struggle to maintain their standard of living if they were diagnosed with a critical illness or were forced to take a long time off work due to sickness or disability. Even those who have protected their mortgage with life cover might struggle, because despite the income-multiple creep, in general, mortgage payments still represent 50% or less of monthly outgoings for the majority of people. This isn’t a situation the average person insuring a mortgage will think about. As an adviser, it’s up to you to make sure they do.
The FSA has made it very clear that in any advised sale, where appropriate to do so, the adviser, in the interests of treating customers fairly, should discuss the client’s protection needs.
There’s a wide range of protection options to match individual risk; family income benefit is often overlooked but offers an income rather than a lump sum. This will provide your client’s family with a guaranteed amount each month, which can be used to pay for all their outgoings. This is an ideal top up to lump-sum life cover for the mortgage. After all, as mentioned earlier, keeping a home means paying more than a mortgage. Just remember to choose the ‘income’ option when you select Life Cover to provide your clients with the level of family income benefit that meets their needs. It couldn’t be simpler.
There’s also the risk of suffering a critical illness to consider – and it’s much higher. According to Munich Re, men have a one in four chance of suffering an illness like heart attack or cancer during their working lifetime, while for women the risk is slightly lower at one in five2. That’s why critical illness cover is so important. For single people with no dependents, it’s probably more important than life assurance. It pays out a lump sum if your client gets one of a clearly defined list of illnesses. This can be used to pay off debt such as the outstanding balance of the mortgage or to pay for drugs or treatment that is not generally available on the NHS. Or, more commonly used, life or critical illness cover, ensures that the mortgage is paid off in either eventuality, whichever happens first. And remember you can choose the ‘income’ option if you want to provide your clients with an income.
You may be wary of lengthening the advice process by introducing more products that need to be explained and forms that need to be filled in. Modern menu plans can help you and Bright Grey, the protection specialist within the Royal London Group, is a good choice here. Using their online quote and apply service you can submit up to 10 covers in just one plan, with one application form, one direct debit and one company to deal with. All the information you enter in your quote will automatically transfer to your online application..
If you prefer to work with a portal quote, you can do that too, in fact you can click through to Bright Grey’s online application service from all major portals. And again, the client information you entered in the quote will transfer to your online application.
Providers that explain things clearly and produce good literature that you can give to your clients help to make menu protection products even easier to recommend. Bright Grey has produced an impressive range of client-facing support materials that will help you sell protection to your clients, some of it is even unbranded and can be used as your own material.
Modern menu protection plans are particularly useful where the client can’t immediately afford all the protection they need, because they can be upgraded later to include benefits missed off at the start.
All this helps provide the foundation for a long-term relationship with clients. But there’s one final thing to bear in mind, and to return to a point made earlier, which is that ideally people need to protect their actual standard of living and not just the mortgage. Otherwise they remain vulnerable. And because their standard-of-living will change as they move through life, regular protection reviews make sense. Which is a good thing for the adviser as it not only helps to build up your client relationships and close the protection gap but helps you to treat customers fairly too!
Sources
1. tickbox.net July 2006
2. Munich Re 2007
