“It should be the cornerstone of all financial advice, from mortgages through to investments and pensions.”
As an example, he points to one adviser who makes protection part of his clients’ pension drawdown advice. He adds: “Even though they are in retirement and taking an income from their pensions, he recommends income protection for their children. This helps to protect the Bank of Mum and Dad if the kids are unable to work due to illness or injury.”
Where advising on protection does not fit with an adviser’s business model, Mr Baigrie recommends outsourcing to a professional. This can either be on a commercial basis, with referral fees paid when cover is taken out, or simply to ensure they are receiving holistic advice.
Insurers can also do more to boost take-up. As well as supporting an awareness campaign such as Seven Families, which helped to show how protection supports families, insurance companies could make it easier for advisers to arrange life cover.
The underwriting process is already benefitting from this overhaul, with insurers removing the need for such great quantities of medical evidence. For example, AIG has shortened the application process on its Instant Life product, removing the need for this evidence. As a result, it takes around eight minutes to complete, with customers notified of the outcome instantly.
Further work could deliver additional benefits, as Mark Cracknell, head of protection distribution at Aviva, explains: “Insurers must remove complexities and create product propositions that suit different adviser models. It has got to be as easy as possible to introduce life insurance to a client meeting.”
Out of sight
Convincing consumers to take out cover may be a challenge, but more work is also required to engage existing life insurance clients. Even though they are likely to be paying a monthly premium, LifeSearch’s research found that 11 per cent of respondents were not sure whether they had cover or not.
Some might steer away from reminding them, for fear it could risk the policy being cancelled altogether, but there are also advisers and insurers in favour of contacting the client regularly.
Mr Baigrie explains: “I recommend calling clients once a year to check the policy is worthwhile. They might need to change their level of cover if their circumstances have changed and some may even be eligible to make a claim. One in nine of the claims we deal with are initiated by a call from our policy review team.”
Increasing cover to suit a client’s changing circumstances is a relatively straightforward process. Guaranteed insurability options enable a policyholder to increase the sum insured without further medical underwriting in the event of a trigger event, such as marriage, birth or adoption of a child, or a larger mortgage.
