Alan Lakey, director at Highclere Financial Services, who also runs product comparison service CIExpert, says: “A simple question as to whether a secure source of income would have been beneficial opens up the conversation and many CI plans include payment for being intubated on a mechanical ventilator for 7 or 10 days.”
On conversation openers, Ben Burgess, senior adviser at Life Search, says: “Ask/understand the client’s views around sick pay, savings, future career plans and any other financial safety nets.”
CI policies have gradually evolved since the 1980s to cover more conditions, including the development of severity-based payouts, where the amount paid out depends on how serious the illness is (early-stage cancer pays less than advanced cancer, for example). While others have gone for the simple approach of just covering the core three conditions.
A favourite question to ask clients about protection has been whether or not clients wanted the cheapest or the best value –most of the time the response has been: ‘What’s the difference?’, which is a great way to begin explaining the basics and adding value as an independent adviser.
Mr Lakey says: “Most conversations will often be based around protecting a mortgage and I always broach the subject of protection at the very outset.
“I ask whether including the essential mortgage protection plans have been included within the budget. Waiting until the mortgage has been offered often backfires as they have other imperatives and it can be difficult to enjoy a sensible conversation.”
Ideally, IP complements CI as it covers different situations. A good way to compare the two is to consider that CI pays out upon diagnosis of a potentially life-threatening illness, whereas IP pays out if you cannot work.
Therefore, IP should cover areas such as stress, depression, a bad back or a broken hip – all of which could seriously impact a person’s ability to work for many months or years, but would not be covered by CI.
With IP, a deferred period is chosen – that is, how long are you unable to work before the income starts paying out?
This could be in line with any sick pay from an employer, although with more people choosing the freelance gig economy route, the so-called employer safety net is somewhat diminished. The deferred period can literally be a few days or weeks, or several months.
Pitfalls, myths and tips
“The most common misconceptions about IP and CI are that it is too expensive, will not pay out, and will not cover Covid-19. Thankfully, all of these are for the most part untrue”, says Mr Burgess.
