Insurance Review: Foster the right mentality

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When it comes to selecting the right amount, and type, of cover, you understand your clients’ needs better than them

Many clients come to appointments knowing how much cover they want and why. But often they are ignorant of the amount of cover they truly need, and precisely what type they should choose.

The need to protect lives and the peace, security and wellbeing of those we hold dear seems obvious. Worryingly, however, most people seem more than willing to spend money on the latest phone or satellite TV package but are less inclined to place the same importance on purchasing critical-illness or income protection. Surely providing financial security for one’s dependants in the event of a long-term illness should be a key priority.

An unexpected loss of income would leave a lot of people in financial trouble, but how many have any sort of contingency plan in place for this occurrence? Most of us have a tendency to ignore what could be the worst-case scenario but this mentality prevents families from preparing for the future and protecting their livelihoods.

A first priority should be simply knowing for how long you could afford to continue paying your household bills if you or a partner were unable to work due to long-term illness. For instance, could one partner afford the mortgage payments on their own, and for how long?

Rarely is the answer to that question: “I can afford the monthly mortgage payments, and for the remainder of the loan term.”

Forced retirement

In a country where people are living and working for longer, the risk of the employed over-60s becoming critically ill increases inexorably. In most cases, such severe illness inevitably leads to retirement, leaving the forcibly retired person in a precarious financial situation.

With this in mind, surely people should want to protect the lifestyle they have grown accustomed to over the years. A serious illness later in life, or having to give up work permanently, could affect both their pension and their mortgage payments.

Confronting these protection issues with clients sooner rather than later can be only a good thing. It will enable them to make informed decisions and put in place the right protection for themselves and their loved ones.

Brokers are fully equipped with both the content and the tools to advise on protection and general insurance. They can ensure that all clients have the importance of protection products explained to them, and that these products are reviewed on a regular basis.

During the good times, do not be afraid to raise the prospect of bad news with your clients. Down the line, should bad times befall them, it could result in your bringing them good news.

Toni Smith is sales operations director at First Complete