Appropriate cover for unusual risks

According to Jeff Woods, business development director for Sesame Bankall Group, “most simply, it’s about advisers getting to know their customers in order to ascertain the types of cover they might need.”

To do this, he says it is important to make sure a customer who considers they will not be eligible for life insurance realise that they can get cover, and why it is important they do so.

He adds: “Challenge them in different situations and scenarios to find out how they would continue to support the lifestyle they currently have.

“This will create a more emotional and powerful effect on the customer’s overall decision-making process, rather than listening to a list of product benefits and features which they might not understand.”

Emma Thomson, life office relations director for Lifesearch, agrees, saying: “Asking how they or their family would be able to pay the bills in the event of death or serious long-term illness is a basic starting point.

Responsibility doesn’t sit just with advisers. Insurers play a part in helping break consumer perceptions that cover isn’t available Paul Reed

“Where clients disclose factors that could pose a risk, it is important not to get put off, especially (as) it is because these clients are deemed more likely to claim because of their health, hobby or job.”

Deepak Jobanputra, deputy chief executive of Vitality Life, says one way to bring home the protection message is through campaigns such as the Seven Families campaign, which aims to raise awareness of the financial impact of long-term illness and disability.

Many insurers offer practical steps, such as Aviva, whose New Thinking adviser site has a range of tips to help advisers encourage clients to think about protection.

Once the client realises they can get cover, and they understand the importance of this, Ms Thomson says the next thing to do is “Shop around, because some insurers are better than others on different risks.”

Budgeting for costs

Although some non-standard cover comes with higher premiums attached, which could prove too costly for some people to afford, Ms Thomson says it might be worth reducing the level of cover.

She explains: “Shortening the term or, if looking at income protection, increasing the deferment period, can sometimes improve underwriting stances, so consider that, too.

“And, with some risks, terms can be improved upon in a few years’ time, so it is worth revisiting your clients at a later date to see if improvements in their health or travel situation can reduce their premiums.”

Expatriates

Another potential bump in the road for advisers when it comes to unusual insurance situations is many UK insurers have withdrawn from offering life insurance to British expats.

Chris Morgan, lead financial adviser for Compass Independent and Unusual Risks, says: “We have been offering life insurance to British Expatriates living abroad for many years, so the recent restriction in the availability of such cover for UK citizens in foreign countries has been extremely worrying both our existing and potential new clients.”

While some niche providers still offer this, over the past few years, Mr Morgan says large insurers such as Legal & General and Aviva have pulled out.

Other niche providers left in the market “seem to be trying to take full advantage of the situation by charging significantly higher premiums than before”, he adds.

Therefore it might be worth looking around for a specialist expat life insurer who offers guaranteed term assurance.

This type of insurance is especially good for British expats who still own a UK property and still have a UK bank account, Mr Morgan advises.

Emma Thomson of Lifesearch, says it is not just the insurers deciding to pull out - it is regulation making it more difficult to reach overseas clients.

She explains: “For overseas based clients, it is more down to HM Revenue & Customs and regulation rather than insurers themselves refusing to offer cover.

“That said, clients who travel to (not reside in) countries deemed high risk due to war, terrorism or HIV positive risks may find it hard to get cover, and stances change frequently due to the changing threats.

“Often when terms to expats are offered, they can be very costly, so options such as excluding claims caused as a result of travelling abroad would help some clients get cover at an affordable price.”

Innovation and education

Working with providers to improve client outcomes is also needed.

“The whole industry could do more”, says Paul Reed, director of Vita. “The responsibility doesn’t sit just with advisers.

“Insurers play a part in helping break consumer perceptions that cover isn’t available. It is the same challenge of helping to break the perception insurers try to wriggle out of paying claims, when in fact statistics from the Association of British Insurers showed in 2014, for critical illness alone, £2.6m was paid out every day.

“That is more than £965m for the year. Coupled with more than 98 per cent of life insurance claims being approved, it is fair to say whether it is the adviser, insurer or even from a legislative perspective, more can be done to educate the customer about the importance of protection.”

As Vitality’s Deepak Jobanputra says: “Our strategy focuses on innovation and we do this by looking at the social issues affecting people, and ways to address these needs.

“Insurers increasingly recognise it is important to innovate, be more inclusive and offer consumers more choice. Consumer engaged protection is the future.”