It is no surprise that few people want to talk about illness or death, so initiating a conversation with a client that forces them to confront various potential negative life events can be extremely tricky.
Illness and death can have very serious implications for a client’s finances, not to mention their loved ones, so it is essential to find a tactical way to approach these conversations.
At the moment, there is an obvious gap in the insurance portfolios of most clients that the adviser community could play a crucial role in filling.
But in order to maximise this opportunity, it is vital that advisers find ways to broach the subject of protection, especially given the critical role that products such as income protection (IP) insurance could play, should the worst happen.
With so many different insurance products presented to clients, it is easy to see how people might feel bombarded and neglect to take out IP.
Many clients disregard IP, deeming it an unnecessary expense because, like most of us, they have a “that would never happen to me” attitude; most people seem to believe that they are somehow immune to illness or accidents.
But in fact, the biggest financial risk most people face is long-term absence from work.
A 40-year-old man, for instance, is four times more likely to be off work for three months than die in the next year, according to a Royal London report which refers to the Institute and Faculty of Actuaries’ Continuous Mortality Investigation Income Protection Committee Working Paper 47, July 2010.
Softly does it
Each year, one million people in the UK find themselves unable to work due to a serious illness or injury, according to the Association of British Insurers.
This is a shocking figure, but advisers who are considering ways to discuss protection with their clients should be cautious about using statistics like these.
Scaring clients with well-known facts, including the statistic from Cancer Research UK that one in two people will get cancer in their lifetime, is often not be the best approach.
Discussing death – and the related need to buy protection – in this way can actually cause clients to close up and suppress any desire to engage in the conversation.
Instead, it may be more productive to use a pre-prepared set of neutral questions to get the client to realise for themselves how important protection could be. For example, advisers may want to start by asking how much the client’s monthly take-home pay is, followed by how much their monthly outgoings are.
From there, it will be important to determine whether the client has any savings, how much is saved and whether they would be willing to use these funds to support themselves, should they need to.