Opinion & Analysis
With the cost of living rising, how can you keep your client’s income protected?
12 Jul 2022
The current energy crisis means that the cost of living continues to rise, and, for many households this has brought significant stress. LV’s recent Wealth and Wellbeing research showed that 44% of people have seen their finances worsen in the past few months, with 47% worried about affording utility bills over the next year.
This paints a challenging landscape for the protection industry, for both advisers and providers to navigate. Many of your clients may be questioning if they can even afford protection.
Can your clients afford not to have protection?
With people relying on their income to cover these increasing outgoings, it’s more important than ever that this is protected. The impact of a life shock for someone without protection could be far more hard-hitting financially, especially when the purse strings are tightened, than for someone who has their main risks covered.
Too often we see protection on the culling list when it comes to managing finances. But, the value of protection is infinite. So we have a job to do over the next few months, whilst the impacts haven’t fully hit everyone, to really remind, re-explain and re-inforce the value of income protection with the aim of keeping vital cover in place, and, to also protect more people’s income to ensure that in cases of adversity they’re looked after.
Keeping your client’s income protected
- Schedule regular protection reviews with your clients
It can be difficult enough to sell a product your clients might be lucky enough to never need, let alone to expect your clients to remember why they have it years later.
Maintaining relationships and taking an active role as an adviser to regularly review your clients’ needs is crucial. We can take a leaf from wealth management philosophies here, and build in regular protection reviews as part of the advice process. Essentially, we’re doing the right thing for the customer – reviewing customer’s financial circumstances and ensuring that in cases of adversity the customer is being looked after.
Any changes in your client’s circumstances from career moves, through to family planning and relationship status can all mean their cover may no longer be fit for purpose. Conducting a fact find review can help you discover how their needs have changed.
Remember, every conversation is a chance to connect with your clients. Whether it’s a re-mortgage conversation or simply a check in, take the opportunity to reinforce your advice and re-visit their cover.
- Remind your client that income protection is more than a claim payment…
Reminding clients of how their income protection supports them in other ways beyond the financial can help your clients realise the untapped value of their cover.
How might they, or their family, have benefitted from a remote GP service in the last year for example? If they have it included in their cover, did they even know this was available to them?
These benefits can feel more tangible and relevant to everyday life compared to something they could never imagine happening to them. At LV=, like most providers, we have a claims report with lots of real life examples and case studies, these are a great tool to show how meaningful protection can be in the moments that really matter.
Protecting even more people’s incomes
- Do your clients actually know the cost of income protection?
A third of those without protection think it’s too expensive, according to LV=’s Wealth and Wellbeing research. But, 72% of these people have never even received a quote. So, why not ask your client if they’ve ever received a quote for income protection?
Comparing their premiums to everyday luxuries like takeaways and cinema trips can show that protection doesn’t have to be expensive.
Or, try flipping the conversation and ask your clients how much they’d be willing to pay to have use of remote GP appointments for their family for example? Compare this amount to the cost of their protection. They’ll get access to these valuable services, plus their financial wellbeing is protected should the worst happen.
- If budgets are tight, prioritise your recommendations
The IPTF believe that Income Protection is the foundation of financial resilience. Without an income, your client’s home, family, lifestyle, and other insurance policies are at risk.
There are a range of Income Protection Solutions on the market that can be tailored and adapted to your client’s individual needs, whether they’re employed, self-employed, in a riskier occupation, a medical professional, teacher, renter, struggle to prove their income, on a budget or own a business – the possibilities are endless.
If budgets flex a little more, then a menu plan can fully protect your clients against loss of income if unable to work, being diagnosed with a serious illness, or death…
Make your conversations memorable
The personal touch goes a long way. Tools such as the LV= Risk Reality Calculator can show your clients the individual risks they face in life, and why Income Protection should be their top priority – a 32-year-old couple have a 59% chance of being unable to work for 2 months or more due to ill health, compared to a 9% risk of death. Leave your client with a final thought of how they’d manage should an income shock happen to them.
Mike Farrell, Director of Protection Sales at LV=