The use of Relevant Life to provide death-in-service benefits for certain individual employees is also a very popular strategy with over 60 per cent of advisers saying they use relevant life with clients on a regular basis.
While strictly not business protection, relevant life tends to go hand in hand with key person insurance, shareholder protection and succession planning, not least because it is business owners that would typically use such strategies.
In our research, half of the respondents said they write business protection.
This is perhaps disappointing because according to research by Legal & General, nearly 50 per cent of businesses have no specific arrangements for their shares if a shareholder died, only 20 per cent have an insurance policy as security for corporate debt, and only 18 per cent have their key persons covered.
This, then, is a real client need and a marvellous opportunity for new business.
Whole of life assurance
Less than half of advisers are writing whole of life assurance for estate planning purposes and still fewer, just a quarter, said they habitually used whole of life for lifestyle protection and/or wealth creation – to replace care costs, for example.
With an unhelpful focus on cost, driven by the price comparison sites, it takes a committed adviser to sell a premium product to a client, particularly if they may have to defend that decision later on.
Whole of life may be more expensive, but for people who have lifestyle protection needs continuing into later life – those continuing to work into what was once the retirement space or those with second families, for example – it may be more effective than a simple term assurance.
The mortgage effect
In our research we asked the advisers which product types they had recommended in the last twelve months.
Naturally, level term assurance was the most popular answer, but with over 70 per cent of respondents naming decreasing term and over 80 per cent of respondents naming critical illness cover with life cover, we may assume that much protection business is still mortgage driven.
Indeed, recent research by Canada Life among consumers purchasing a home revealed that over three quarters had a protection conversation with their adviser.
One would hope that it would be commonly accepted practice and seen as perfectly natural for people taking out a mortgage to protect their debt.
Yet, Canada Life’s research also revealed that 13 per cent of those surveyed did not have a protection conversation at all and of those that did, 28 per cent of customers decided not to purchase a protection product.
There remains an opportunity, if not an obligation, for advisers here.
Putting policies in trust
In most cases, for life assurance written for lifestyle protection purposes, it is important to put the policy in trust for the beneficiaries.