Advisers are struggling to turn conversations around income protection into sales, according to a survey from the Income Protection Taskforce (IPTF).
The survey found that more than half of adviser respondents (57%) said that they recommended income protection (IP) to at least 70% of clients, with around one-in-five (19%) making a recommendation to more than 90% of clients.
However, despite an encouraging number of conversations taking place, converting discussions to sales remains an obstacle. The IPTF found that three quarters (74%) of advisers reported that less than half of their clients went on to take out an income protection policy.
For 21% of these advisers, the figure was less than 10%.
At the other end of the scale, just 1% of advisers said that 90% of the clients they spoke to about IP went on the purchase the product.
Jo Miller, co-chair at the IPTF, told PA's sister title COVER that the research suggests that the conversations taking place between advisers and consumers about IP aren't necessarily conveying the value of the product.
Highlighting research conducted by the AMI (Association of Mortgage Intermediaries) last year that found despite 97% of advisers mentioning protection, only 36% of clients could recall a protection element to the discussion, Miller said that the IPTF research indicates that clients remained unconvinced of the need to purchase cover.
"We've spoken to networks and advisers who are successfully advising on IP and have subsequently seen policy sales increase. One driver of their success is leading all protection conversations with IP, followed by life and critical illness cover. This approach ensures that focus remains on IP as the cornerstone of the protection strategy," she told COVER.
"Moving the conversation about life and critical illness cover back often helps conversion rates on these products because, by this point, the adviser has already explained the in-depth workings of IP and the need for cover. The client is therefore convinced of the real value of protection products, making the decision to purchase more 'straightforward' products that bit easier."
Despite the challenges discovered in converting conversations with clients in sales, the IPTF's research found advisers in an optimistic mindset about the future.
Just under three quarters (73%) of advisers expected to sell more IP in the coming year, with only 1% expecting sales to be negatively impacted. The largest proportion of respondents had no real concerns about the year ahead, although those who were more cautious were most likely to concerned about harsher underwriting and the resulting potential increase in premiums that might be seen.
IPTF's Miller commented that although sales of IP have been "heading in the right direction" in recent years, the product remains "drastically undersold" with adviser understanding and approach proving important factors in this.
The primary barriers identified to achieving higher IP sales by advisers in the research were client knowledge and cost.
"Historically, IP has been perceived as a complicated product - involving complex underwriting and application processes, admittedly made slightly trickier by the pandemic, but despite this, the need for IP will always be there and it's essential that these conversations continue. Of course, advisers have a key role to play here," Miller said.
"When we consider consumers, there is a mistrust of insurers and whether claims will be paid, but this is easy for an adviser to overcome with claim stats published each year showing that consumer perception is not reality. And then there's a whole cohort of consumers, particularly younger ones, who don't even have an awareness of IP, how it can support their lifestyle, or the value of financial advice.
"With the pandemic lasting over a year now, more people understand the threat to income from unexpected events and that has to represent an opportunity for market growth and one that we would encourage advisers to seize."
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