Protection barriers come in many shapes and sizes and can be viewed from the perspective of the adviser or the insurer, as well as the customer.
We asked a wide selection of industry experts to tell us the main issues as they see them and how to overcome them, from wealth and mortgage advisers to protection specialists, insurers and those that provide the technology that underpins the protection research and buying process.
The key finding of this research is summed up by a comment from Kerry Nelson, chief executive at Nexus Independent Financial Advisers: “[Protection] has higher barriers to entry [in comparison to other areas of financial planning], however, it can often have the biggest impact for a client and their family.”
Those who advise on protection will no doubt have many of their own stories about the devastating impact of illness or injury on individuals and their families, and the peace of mind afforded in such circumstances by protection insurance.
Anyone who has not experienced this among their clients need only take a look at the Seven Families project or Protection Guru’s bank of case studies.
The impact of protection simply cannot be underestimated
A mortgage represents a hugely significant purchase. Wealth planning is essential to achieving future financial goals and securing your financial independence. However, protecting the ability to meet such important commitments, whatever life throws your way, while also covering day-to-day living costs, should in theory be viewed as natural a partner to mortgage and wealth planning as bread is to butter.
So, how can we get to that stage? Here, based on the summarised opinions of our expert commentators – and in no particular order – we have come up with the top 10 most common protection barriers; some focused on adviser or insurer processes, as opposed to barriers from a customer perspective, but all ultimately impacting the customer and industry growth in general. In each instance, we also touch on how to overcome such barriers.
1. It is too expensive
This represents an age-old barrier. And overcoming it is relatively easy; it simply takes good advice.
Mike Donohoe, strategic development director at Caspian Insurance, explains that in most cases, customers do not do any desktop research before contacting an insurer or adviser, but they might talk to a friend or family member about protection products. This can create an unrealistic expectation around their own premiums. He explains that they expect the purchase to be transactional as opposed to tailored in terms of being “assessed on each customer’s individual mortality and morbidity rates,” he says. “So, it can be difficult to explain why this process is necessary.
“For customers who feel like they won’t be eligible for life insurance, ensuring they understand the value of advice attached to such an important product is arguably the most important barrier to overcome.”
Value represents a key theme across all our commentators. Katy Davies, protection adviser at Hanbury Wealth, says that it is important to help clients figure out what costs are essential and how they would cover such costs if they lost their income, while also ring-fencing their savings. “As an adviser, I don’t believe I am selling a policy. Rather, I am providing peace of mind,” adds Davies.