Quoting the protection gap figure somehow reminds me of old films. The shock and awe shown on the faces of the characters when they are told the value of whatever the sought after treasure actually is can be almost comical, largely because it's often (for the time) an astronomical and meaningless figure.
It may seem I'm making light of the issue, but that's not my intention. I struggle to put real context onto a figure of £2.5-3trn. Especially what that figure actually means to me, and more importantly, my family. So how easily can the average man in the street, who is not immersed in the insurance industry on a day to day basis, make sense of what it means to them, let alone their families?
Of course, even if we can make this figure more relevant by relating it back to their personal debts, many people still don't see the value of the cover they need. So how do we sell this need to them?
There are really only two options. Having a proper engagement to explore the risks of suffering an illness, accident or death, or by making it compulsory.
Neither of them is perfect, and compulsion doesn't always work. Take car insurance. There are far too many people who drive without buying insurance, probably because they think it costs too much and they don't think they need it (regardless of the legal status.). It's also not that easy to apply to an industry where cover is related to an individual’s personal circumstances.
That means we're left with trying to convince them that there is an actual need for it. Of course, there is a very fine line to tread. The FSA is concerned that people will be scared into buying something unsuitable. But I think there is room within their guidelines, to make it clear to people that they could suffer an illness, they could be off work for an extended period and that they could even die. We, as an industry, should not be afraid to make these points. But things do unfortunately happen.
Mark Jones is protection products and actuarial manager at Friends Provident.
The views expressed are those of the author and not those of the company he represents.IFAonline
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