Protection - April 2012
Protection products are considered by many advisers to be a challenging thing to sell. They remind people of their mortality, or that bad things can happen to their health and that the future of their family is at stake.
But for its advocates, protection is a crucial product that should be at the top of many advisers’ lists. For those that have put extensive policies in place, they have found their clients to benefit from them greately. And the claims figures bear this out. Claims statistics on critical illness policies are mostly in the region of 90 per cent, or above, and have been rising. Legal & General, for example, paid out £441m in death and critical illness claims in 2011, compared with 2010 when it paid out £373m. Friends Life said it paid out 90 per cent of all critical illness policy claims last year.
Examples from proponents bear out the benefits of what happens when the correct policies are put in place. One adviser cites a case where he had a client with an old critical illness policy, and had to have a lumpectomy, but because of the definitions, it did not initially pay out, because the procedure was non-invasive.
However, the client’s cancer then spread, and the policy did pay, so the mortgage was paid off, and she had arranged a policy to pay out an income of £35,000, index-linked each year, so that she did not have to work again.
The policies put in place also provided funds for someone to look after the children and for the husband to go out to work, if the worst happened. This did indeed take place: the woman is in a hospice and not really aware what is happening, while the husband is trying to look after his three sons.
The policies paid out, enabling the family to move home and renovate the new property, and be reassured that their financial future is secure. It is just one example of many, that if the advice is right, then an adviser can rescue a family financially while they are dealing with emotional trauma.
Melanie Tringham is features editor of Financial Adviser
This special report is in association with LV=. For product information click here.
IN THIS REPORT
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