Persuading clients to take out protection can often be a difficult and drawn out process.
Even if clients are persuaded by the sound financial reasons for taking out life, income protection, critical illness cover or more, the next barrier may well be the cost. Or at least, the perceived cost.
Clients can usually see the long-term value in putting money into pensions or Isas, or paying off their mortgage, but spending tens or even hundreds of pounds each month for a product most people hope never to use can be harder to accept. Marketing people often refer to it as a ‘grudge purchase’.
A recent report from Royal London found that just 26 per cent of the UK population have life insurance, with just 6 per cent having critical illness and only 4 per cent having income protection.
In each case, the biggest barrier for taking out cover was cost.
Like many products, with protection, you get what you pay for. You’re not going to get £500,000 life cover for £5 a month and it is essential to ensure that the amount of cover provided meets your clients’ needs – and budget.
With this in mind, there are ways to reduce the cost of protection while keeping the client’s needs in mind.
1) Review existing cover
The easiest way of bringing down the cost of protection for clients is often to review existing policies.
The overall cost of life insurance has been falling for decades and the UK has some of the lowest prices in the world. Healthy clients with older policies may find their premiums could reduce without any changes to the level of cover, even though they are older.
Alas this is not quite so straightforward for critical illness or income protection, as premiums can often go up and there is much to consider before switching cover, but it is worth checking.
Alan Lakey, founder of CI Expert, says it is particularly worth looking at clients with life insurance approaching a five or ten year review on an existing policy: “This might not save clients in the short-term but moving to a guaranteed rate now will save clients from big potential increases after a review.”
He also recommends paying particular attention to clients who have been given a rating/loading or exclusion by their insurance company.
Speaking about a client who had cancer and took a policy with an exclusion for the cancer and a 50% rating, he said: “After a number of years, I decided to review the policy and after asking discreetly if he was in good health I looked for alternative cover.
“He was offered a new policy at normal value and with cover with no exclusion. I was able to cut his premium, and he was now covered for cancer too.