Advisers and providers are "missing a trick" when it comes to business protection and should take advantage of a relatively untapped market.
That is according to market specialists Mark Meads, of Aegon Scottish Equitable, and Standard Life’s Mick James.
Business protection has several elements but chiefly protects a firm from the potential loss of “key” employees whose absence, through serious illness, death or other, could financially cripple the company.
However, due to a complex processing system, a lack of product variety and a drought of market specialists, business protection is often overlooked by advisers.
Meads, head of sales for individual protection at Aegon, says there is a £27bn market gap just waiting for advisers to get involved.
He adds: “This is another income opportunity for them.
“It’s complicated but once you get to know about protection and how it works it’s actually not that bad.
“Advisers that have taken the time to learn about it get it pretty quick and it can be very lucrative for them.”
Mick James, marketing manager for protection at Standard Life, says there needs to be a number of changes in the industry before business protection becomes a top-seller.
“IFAs [that are selling business protection] are focusing on the top end of the market, but there is a whole other sub-culture of smaller firms whose key people are just as vital,” he says. “Advisers are missing a trick here.”
He says existing products are tailored for larger firms and intermediaries might not be interested in sorting out business protection for the less-lucrative smaller firms.
The administration process of setting up business protection could also be putting some advisers off, he adds.
“It can be quite time consuming and intrusive”, he says. “Directors might be asked things like: “Why do you need this much cover?” and asked to come up with a year’s worth of annual reports and accounts.”
Despite this, he says there is money to be made. “There is a huge opportunity for providers to innovate and a huge opportunity for advisers to get more business,” he concludes.
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From 6 April 2019