ProtectionApr 10 2013

Vivid pictures illustrate protection’s relevance

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For those not old enough to remember, or who did not watch it because they were Tiswas fans (on ITV), the concept of the show was based around children swapping their games and toys. The show was completely new and exciting and unlike anything that had been on children’s television before. Swap Shop was effectively the first recycling TV show, with children all across the country recycling their unwanted toys and gifts by swapping them instead of throwing them away.

Would the programme enjoy the same success now? Well, with so much emphasis on having the latest gadgets, the chances are not many children would be interested in getting a second-hand version of something they desire. But if they did, there would certainly be some very different swaps. “I’ll swap my iPhone 3 for an iPhone 5 please, Noel” or “… my Nintendo DS for an Xbox 360”.

This out-with-the-old-and-in-with-the-new lifestyle has tremendous cost implications for families. Rather than saving up for an expensive item over time, people will buy it immediately even if this means going into debt and maxing credit cards to the limit. Big-ticket items that used to be for Christmas or birthdays are bought at any time of the year. And it does not help that most people now rely on expensive gadgets to manage their lives. We are the ‘i’ generation fuelled by advances in technology and the Apple marketing machine – iPads, iPods, iPhones are seen as must-haves.

By racking up debt in this way, people are leaving themselves open to all kinds of financial complications further down the line. And the problem is the more people have (or aspire to have), the further it will be to fall if things go wrong. What would happen if the main breadwinner became critically ill and could not afford to pay their mortgage, rent or utility bills, never mind the luxuries? People do not like considering their own vulnerability, so protection falls way down their list of priorities.

It often takes a trigger to get around this issue and start having conversations about protection insurance. For some people, they may decide to take out cover after experiencing someone they know becoming seriously ill. For others it could be entering a new life stage such as moving house or having a baby. Advisers themselves are in a great position to act as a trigger by explaining the need for protection in a way that will resonate with clients. Talking about protection in terms of lifestyle will make the importance of it come alive.

One way of doing this is to paint pictures to make clients imagine what would happen if their circumstances changed. What do they value most about their current standard of living? How important is their home, their car, their social life and their annual holiday? Do they enjoy treating their children to trips to the cinema or funfair? Then ask them to imagine what would happen if something changed. How would they feel if they could not afford the car any more? What if they could not go on holiday ever again? What if they could no longer treat the children? Protection is very valuable and real-life examples are a good way of illustrating its relevance.

The cost of living may be at an all-time high but that has not stopped many continuing to live beyond their means. We need to educate people to be aware of their financial future and to put down solid foundations now. No one is going to stop spending but instead of buying something new every week, why not put some of that money towards a protection product.

Roger Edwards is managing director of Bright Grey & Scottish Provident

Key points

■ Rather than saving up for an expensive item, people will buy it immediately even if this means going into debt and maxing credit cards to the limit.

■ By racking up debt in this way people are leaving themselves open to all kinds of financial complications further down the line.

■ The cost of living may be at an all-time high, but that has not stopped many continuing to live beyond their means.