How to help clients with multiple protection needs

Ricky Chan, director at IFS Wealth & Pensions, spoke out about the arduous process of finding appropriate cover for clients who have complex protection needs and require a mix of policies such as life, critical illness, or income cover. 

This often means they require a variety of providers because the same insurer is not always the most competitively priced in each area or does not offer the same level of cover and benefits, leading to extra paperwork for both advisers and their clients, Chan says.

He adds: “I think providers can do more to assist clients with multiple needs during the application and medical questionnaire stage.

"For example, with enhanced annuity quotations, a ‘common quotation’ form can be used and sent to multiple providers to receive a quote. If the same could be done with protection, and perhaps the client can authorise the sharing of GP reports among insurers, then this would save a lot of time and I imagine costs to the insurers too. It should hopefully lead to more transparent pricing for those with underlying conditions too.”

Chan points out that one of the difficulties with the current application process is that different providers often ask the same question slightly differently.

An example of this from his experience has been one provider asking whether the client has had a particular condition in the past five years, while another provider has only required the information for the past two years.

To make matters worse, different providers have different systems to contend with as some only have an online process so that clients can complete the questionnaires at their own convenience, while other providers will only offer a long paper-based application, making a lengthy process even more laborious. 

"This might not sound so bad for young clients with no underlying health conditions," says Chan, "but for someone with underlying conditions this may not be the end because if the policy is rated or exclusions have been applied after medical underwriting then it may be best to submit a further application with another insurer to see if this offer can be improved upon. And then a further wait as the new insurer is likely to request a new GP report. Although pre-sales medical underwriting departments have been invaluable for advisers to discuss cases, they can’t provide guarantees of the underwriting outcome until they’ve seen GP reports and test results.

I think providers can do more to assist clients with multiple needs during the application and medical questionnaire stage.--Ricky Chan

“Even assuming everything went smoothly, there may yet be multiple trust documents to complete for the client if there were different insurers, which means more paperwork and time required from trustees and witnesses too.”

Removing the stress

Clients who have multiple protection needs often use IFAs so that they are not bogged down with the process of finding the right cover. 

The adviser’s role is to help their client sift through the options and guide them to make the best choice.--David Williams

That is why Daniel Elkington, chartered financial planner at MT Financial Management, says advisers must make the process as stress-free as possible for clients. It is also why he carries out a mini fact-finding session with clients before going away and doing his research in a bid not to burden or overload clients with information. 

Elkington, who is currently studying for a PhD researching professionalism and financial planning at Manchester Metropolitan University, says: “My opinion is, as an independent financial adviser, you’ve got to do the best thing by the client. If that means using several different providers then so be it.

“Personally, I tend to sit down and do underwriting with clients using my laptop, and there is a lot of repetition between different underwriting approaches. I’ve tried using these underwriting portals before, but haven’t found one that works in the way I’d like it to yet.

“What I find to be super effective is to go through a mini underwriting exercise with clients at fact-finding if they want insurance, as you know what most of the questions are and then you can examine the firm’s approach to underwriting those conditions before you apply.”

Help advisers help clients

David Williams, head of group risk at Towergate Health & Protection, argues that providers can also do more to make life easier for financial planners who have clients with complex protection needs. 

Williams says that a possible solution to alleviate the current painstaking process is for providers to continually educate advisers on their specific propositions. This is to ensure that IFAs can give the most accurate and appropriate advice to their clients in a complex and overlapping market.

He comments: “There are different protection providers in the market, each offering different products and features. The adviser’s role is to help their client sift through the options and guide them to make the best choice. 

"Having a broad knowledge of the provider market and their specific propositions is key here. Recognising which products can help address the client’s needs means better outcomes for those clients and that includes understanding the added-value benefits that often sit behind the insurance products."

Williams adds: “Providers recognise their responsibility to help and generally keep their product range within broad categories, but there are always differentiators and enhancements in them.

"It is important for providers to continually educate advisers on these subtle points to ensure that advisers can give the most accurate and appropriate advice possible to their clients in a complex and overlapping market.”

Aamina Zafar is a freelance journalist