ProtectionJun 3 2020

What crisis teaches us about having a holistic approach

  • Explain how current crisis has exposed poor levels of protection
  • Explain how LPA can work effectively
  • Identify ways in which advisers can guide clients
  • Explain how current crisis has exposed poor levels of protection
  • Explain how LPA can work effectively
  • Identify ways in which advisers can guide clients
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CPD
Approx.30min
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Approx.30min
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CPD
Approx.30min
What crisis teaches us about having a holistic approach

These are not easy subjects to broach, but we have a duty to encourage our clients to talk through the issues with their relatives, help families weigh up their options and make sure they have the protections and insurance cover that they need.

That might be life cover, critical illness cover, income protection, funeral plans, or other provisions. 

We regularly hear stories of clients who suffer a serious illness and do not know that their insurance covers them for that particular condition.

It’s our job as financial advisers to keep educating our clients with this important information and to ensure that the family knows what to do if the insured is incapacitated.

It is also important that they know they can come to you for advice on their policies should the worst happen. 

It’s surprising how common it is for clients to worry about bothering someone when they are in a time of crisis or need.

That’s why it’s so important to reiterate to clients that your door is open and they can come to you for help.

Trusts

That brings us onto trusts, many of which relate to life cover. 

At the moment, with current delays in the system, bereaved families can be waiting up to two months or more before probate is granted on an uncomplicated estate.

You need to be able to ensure the proceeds of your clients’ policies are paid to their families unencumbered without having to wait for probate before money can be paid out.

So make sure your knowledge in this area is fresh and up to date.

A good place to start are life insurers’ websites, or you could revisit your study materials from your Diploma in financial advice. The LIBF’s DipFA is perfect for this. 

For life cover policies that include critical illness, you will need to use a discretionary split trust.

This is a flexible way of making sure that a client’s specified beneficiaries receive the life cover payment should the worst happen and the life assured dies.

However this cover is retained for the client’s own benefit if they suffer a critical illness.

The trust is flexible and will allow your client to choose a wide range of beneficiaries as well as to add more beneficiaries once the trust is set up. 

Always remember the old adage that protection is the cornerstone of all financial planning.

A holistic approach 

One explanation for the continued fall in people taking out protection cover could be related to the mis-selling scandals of recent years and the popular myth that insurers don’t pay out.

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