ProtectionApr 17 2014

The root need for protection?

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A mortgage is very often the trigger for a person assessing (or having assessed for them) their Protection needs.

When you think about it, this makes a great deal of sense; the customer is about to take on the largest single loan they are ever likely to owe. Typically they are either parents or plan to become parents in the not too distant future and a marriage or a long term partnership is on the cards, if not already in place.

If the breadwinner or the stay at home parent were to fall ill or, worse still, die prematurely, the consequences for the survivors could be catastrophic. It is right, therefore, that we discuss these risks and guide clients to a suitable amount of cover.

In my view, the mistake many within the industry make is to focus on the mortgage itself as the root need for Protection. This fails to connect with many customers and makes the cover seem like an “add on” or something which benefits the lender, rather than the customer or his/her family. After all, I doubt many claimants of Serious Illness Cover’s first thought is “thank goodness my bank will be OK”; their immediate concerns would be getting healthy and seeing their family through the tough times ahead and this is where the Protection sale should focus.

Surely a holistic approach to assessing needs means that precise overlaying of cover onto debt is unnecessary

As an example, we were asked recently whether we should design a product which matches the debt resulting from clients taking a Help to Buy approach to home buying (where the traditional mortgage element reduces over time, but the government debt does not). Surely a holistic approach to assessing needs means that this precise overlaying of cover onto debt is unnecessary.

Often, affordability is a barrier which is hard to overcome when arranging cover for those taking a mortgage. The borrower is usually stretching themselves to near the limit in order to be able to afford the right property, so adding Income Protection, Serious Illness Cover and Life Cover is tough.

Moving the conversation to the customers’ lifestyle can help here. Use a budget planner to identify areas of regular spending and create solutions which focus on these activities: sports, socialising, regular subscriptions – they all paint a picture of that person’s life away from debts and direct debits.

Our health living programme, Vitality, makes it easier to get healthy through discounts and motivating rewards. If your clients buy Vitality Plus or Vitality Optimiser for an additional monthly fee, they could benefit from rewards such as 50% off monthly gym fees, a weekly cinema ticket, a huge range of leisure pursuits and sports equipment, and even discounts on holidays. You might even find that your clients can fully offset the cost of Protection by taking advantage of Vitality. In this way you can not only offer ‘help to buy’ but, crucially, help to live.

Justin Taurog is Distribution and Marketing Director at PruProtect