What do clients think about protection?

There is clearly a big job to be done in educating the consumer about what we do, as well as educating us about the consumer. Recent figures from the ABI show insurers paid out over £6m a day in 2012 to people who made claims on life insurance, income protection and critical illness cover.

We began campaigning for protection providers to publish their claims statistics around 2004. Today, most providers that sell through the advised market publish their claims stats each year, for life, critical illness and more recently income protection.

There is clearly a big job to be done in educating the consumer about what we do, as well as educating us about the consumer

The reason behind publishing the stats was never to create a league table of which provider pays out the most claims, but as an industry to be able to show that the overwhelming majority of claims are paid year-on-year - and when they are not paid to be able to explain clearly the reasons.

Many providers produce sales aids for advisers on claims stats each year. These alone will not convince someone that taking out protection is the right thing to do, but they can help to allay fears as to whether this type of cover pays out and show the importance of full and honest disclosure at application.

You can download guides from the individual provider’s website, or the Protection Reveview website also provides an overview of each insurer’s stats.

Concerns over cost

The research asked people what has, or might, put them off buying protection. Unsurprisingly cost came out top.

But then, when asked what they would be willing to pay for protection cover each month, the average response came out at just over £50 a month. This suggests that people have an inflated assumption of what protection actually costs and they may be surprised to find it is a lot less than they think.

Compare the £50 figure to the average £26 monthly premium paid by someone buying through protection intermediary LifeSearch; protection costs in reality almost half of what people said they would be prepared to pay.

Clearly there is an opportunity to help clients see not only that the cost is often less than they assume, but to make sure they understand the value of the cover they are buying.

Those advising regularly in the protection market will know that cheapest rarely means best when it comes to protection, and it is their job to balance a recommendation between quality of cover and cost of premium. This can be a difficult task when insurers are constantly updating their products to remain competitive, particularly in the critical illness market.