Protection  

How to have the protection conversation with clients

  • Describe some of the challenges facing clients and protection
  • Identify ways of overcoming reluctance to buy insurance
  • Explain how to make proctection more accessible
CPD
Approx.30min
How to have the protection conversation with clients
 Pexels

The protection insurance industry is playing all the right notes, but not necessarily in the right order. All the elements are there for an excellent result, but for those listening, it does not sound all that great.

On the face of it, the industry has a compelling story to tell. After an international pandemic and amid massive economic uncertainty, UK workers fear a loss of earnings more than ever.

According to The Exeter’s recent survey of over 1,000 full-time and self-employed UK workers, more than two thirds (67 per cent) of Britain’s working population are worried about a loss of earnings due to injury or illness, such as Covid-19. Meanwhile, seven out of ten (70 per cent) workers say the pandemic has made income security a bigger financial priority.

Yet the market penetration of protection insurance remains slight. Fewer than one in five (19 per cent) working adults protect their income through insurance, the survey suggested, and fewer than one in ten (9 per cent) of the self-employed workers.

That is despite the fact that the self-employed have been among the hardest hit by the pandemic, with close to half (46 per cent) of self-employed workers in January reported having had trouble paying for basic expenses, according to research by the London School of Economics.

It is vital to address this issue, and to do so urgently. The pandemic has revealed to many the precariousness of life and their need for protection. The economic uncertainty and likely coming rise in unemployment also argue for an increasing role for such cover. 

Emergence from the pandemic as the UK unlocks could set the scene for strong growth in the protection market. Analysis by Mintel last year forecast a fall in the income protection of a quarter in 2020, followed by an increase of 70 per cent over the period to 2024. 

As one of its analysts said: "The pandemic has raised people's awareness about how vulnerable they really are to a period of lost income. If providers can find ways to build on this engagement, then growth over the long term should be boosted.”

To capitalise on that, though, the industry needs to understand the barriers to purchase. If it does not, it cannot hope to overcome them.

Barriers to growth

There are, of course, several reasons for the lack of uptake when it comes to this type of cover. For instance, there is still a lack of awareness among working people about the importance of income protection.

Advisers have a key role to play here in making sure they raise the issue of protection with their clients. However, just 7 per cent of adults in The Exeter’s survey said that an adviser had approached them about their requirements. Other surveys, have also found that even where advisers do promote protection products, conversion rates are still low.

Cost, too, remains an issue. There is still a perception among consumers that the cost of protecting their income is high. However, buyers can choose to cover less of their salary to make it more affordable, so this should not be insurmountable for many.