Raising the subject of income protection

But Martin Sincup, income protection manager of LV, says advisers need to change the conversation around protection away from them being policies that protect things, to policies that protect an individual and their family’s lifestyle.

Changing jobs, reviewing mortgages, or writing wills: new circumstances always mean new opportunities and that includes protection. Have your

Mr Sincup says to look out for clients’ circumstances changing due to:

• marriage/civil partnership;

• divorce/end of civil partnership;

• birth/adoption of a child;

• promotion or change of job;

• mortgage;

• change in a business’s value;

• inheritance; and

• retirement.

During an initial fact-find the adviser will look to understand their circumstances, what their income is, if they have any dependents, what debts and liabilities they may have and any existing protection they may already have in place.

This is a good opportunity to ask the client how they would cope financially with long-term or serious illness as well as assess what their financial priorities are.

Peter Hamilton, head of retail propositions at Zurich, says advisers should get an understanding of the client’s expectations: what they’re looking for from any meeting and their expectation of how it is going to run.

Once the adviser has this information, Mr Hamilton says he or she can tailor the approach.

Mr Hamilton says: “The adviser will explain the advice process, to put clients at ease and allow them to see the benefits of the process.

“Clients typically only hear the things that are important and of interest to them. It will be important to understand what the clients could care about – protection triggers.”

According to Mr Hamilton, there are five protection triggers, comprising:

• the effect on their children and their future;

• continuity of home life;

• protecting lifestyle;

• protecting the mortgage; and

• looking to the future.

Dougy Grant, protection director of Aegon UK, says advisers should simply ask their clients;

1) If you couldn’t work due to a serious illness or accident, how would you manage?

2) How long could you get by on savings or on your sick pay from work?

3) Could you ask a friend or relative?

4) How long would it be before they had to stop supporting you?

LV’s Mr Sincup says the main groups that would not usually benefit from income protection are: the unemployed (although houseperson cover is available), people who already have adequate income protection and the retired.

If someone works, spends their money on things and would suffer financially if they lost their income then Mr Sincup says income protection is likely to be suitable.

It also doesn’t matter if someone is single, or has dependents, as Mr Sincup says there is usually a need for both groups.

Mr Sincup says: “The strong link between house purchases and protection sales is no bad thing.

“However, there is a danger that the traditional dialogue may leave many feeling that none of the products are relevant or necessary for them because they rent or are single so don’t have any dependents that would be left financially vulnerable if they were unable to work or no longer around.”

Mark Dennison, owner of LightBlue UK, says the key thing is that advisers should highlight that for most people their income is important therefore preparing for what would happen if they were to lose it should be equally important.

He says: “People insure many things from the homes and cars to their phones and weddings, but few people insure the one thing that pays for everything else: their income.”

Julie Higman, income protection product manager of Aviva, says it may also be useful for advisers to ask their clients whether they know how much sick pay they would get from their employer or the government.

Ms Higman says we often think of illness being short term but Aviva’s claims experience shows the average claim is now over nine years, so income protection can offer considerable comfort for a very long period of time.

Kevin Carr, chief executive of the Protection Review, says the ultimate way for advisers to highlight the need for this cover is to ask people to list their main outgoings and go through which ones would cease first without an income.