Need for clarity
There is a notion surrounding protection policies that they are sold rather than bought. While advisers are typically renowned for making complex ideas accessible, there is still work to be done to facilitate constructive conversations around protection and ease client worries around cost.
The Exeter’s research showed that just half of adults think the language used to describe insurance products is easy to understand. Of those who already had IP or had considered purchasing it, more than a quarter (26 per cent) said they found it difficult to understand what the benefit of IP was, what it covered, and when it would pay out.
“The protection market is one that constantly evolves based on the needs of consumers, and I believe it’s a sector that is very quick to react,” says Makayla Everitt, head of business development at SimplyBiz Mortgages.
However, Everitt says there are areas of the market that could be simplified, improving client confidence in the cost of protection.
One area is communications from advisers and brokers, something that Everitt says is “absolutely key to helping improve understanding and build consumer confidence”.
She continues: “Personally, I’d like to see an annual statement issued to clients, setting out clearly the cover they have in place and the additional services that come as part of that cover; for example, access to bereavement counselling, or a 24-hour GP service.
“It’s natural that the protection cover a client has in place is something they don’t think about until they have to think about it. An annual statement could not only help them to understand the value of that policy, but also the value of financial advice, in line with their changing needs.”
As well as provider-driven changes to the protection industry, Everitt argues that advisers should integrate protection into the overall cost of a financial plan, rather than an extra add-on that garners a further fee.
“For example, if a client has purchased their dream home, they need to understand that protection is a layer of reassurance to allow them to keep that property if anything unexpected may happen, rather than a hinderance," Everitt says.
Fundamentally, client confidence is dependent on transparency, honesty and the value added by an adviser. A tailored discussion of protection costs can go a long way in providing a fair and balanced view.