Each customer is different and will have different motivations for the protection they choose to take.
This may come down to the number of critical illnesses that a policy will cover, to the claims history of a provider.
It is again essential that the reasons for the policy chosen fits in with the features that a client is looking for.
A lot of advisers worry about the client just going online and buying the cheapest, and this most certainly happens if the client fails to see the benefit to themselves of what is being recommended.
Why the amount? This is fairly straightforward for mortgage cover, as the amount recommended should match the loan amount.
However, if family protection cover is being recommended, it is essential for the customer to understand the amount that has been recommended and what this will do for their family in the event of a claim.
It is equally relevant for critical illness and the benefits that this will have – not just for peace of mind during the illness, but the long-term benefits should the recovery take several months or even years.
There is also a psychological element to a critical illness that needs to be catered for, as mental wellbeing during this difficult time is often overlooked.
For income protection, do they just want to protect the mortgage payments or go further into protecting their income. It is also very important to consider their current arrangements so as not to over insure them. So that means checking what they have in place at work, or from current policies.
Why the term?
Again, for mortgage protection, it should be for the outstanding term of the mortgage.
However, as a policy can only be taken out in whole years, it is all too common for a term shorter than the outstanding term of the mortgage to be selected.
For family protection, this is more difficult to pin down.
If your clients have a young family, the important question here is would they want to provide protection for their family whilst they are still at home and not necessarily independent, which is getting later and later in life if current trends continue.
The traditional view was to take family protection through to when the children reached 18.
But what about while they’re at university?
Would they really want to end their studies due to financial hardship because of a family death or serious illness?
Without a crystal ball, independence can be logically set at between 25 and 30 years old, and plans should be made accordingly – allowing time for children to get established in a career and to have a home of their own.
