Clients need hand-holding when it comes to protection but the extra time spent will provide a regular income
It’s difficult to put a price on obtaining peace of mind. But when it comes to financial peace of mind it’s not always easy to look ahead and evaluate worst case scenarios.
You only have to look at how many people put off making a will to realise that trying to come to terms with what the future might hold is a sombre experience that many don’t want to think about so avoid at all costs.
As an offshoot from this mentality, protection cover continues to firmly reside in the ’could do better’ stakes for providing this financial peace of mind.
Recent data from Sainsbury’s reveals that 43% of mortgage holders in Britain do not have their mortgage contributions covered by life insurance.
The findings suggest that there are more than 7.1 million people with a collective outstanding mortgage balance of £318bn who have no life insurance to cover this.
This is a 47% increase on the £217bn of mortgages not protected by life cover in 2006, when Sainsbury’s last conducted this research.
Part of the problem regarding the protection market is its somewhat complicated nature.
A review by Defaqto suggests that there is confusion about the different types of protection, especially between critical illness cover and income protection.
This confusion could result in consumers ending up with inappropriate cover.
This combination of head in the sand attitudes and lack of understanding underline both the potential of this sector and the importance of people getting the right quality of advice.
Sufficient protection is more affordable than most people realise but it is not always an easy sell
It is no bad thing that the growth of comparison websites has highlighted the need for insurance cover in various guises.
But while it is fair enough for consumers to buy some forms of insurance where there is enough information to make an informed decision, this is certainly not the case for many areas of financial services. There is also the argument that we as an industry need to educate consumers more regarding the advice process and the merits behind it.
Sufficient protection is more affordable than most people realise but it is not always an easy sell. It takes time to explain and justify it to customers.
Previously, the value offered from protection sales paled in significance compared with the volumes generated by pure mortgage sales. But obviously times have changed.
We have all had to evolve into more holistic advisers and the importance of protection cover has risen.
We believe it is only right and proper, and in line with Treating Customers Fairly guidelines to discuss protection needs at length with our clients – even if this conversation may be uncomfortable.
This way clients will have access to all the necessary facts and figures to enable them to make informed decisions.
Of course this remains a complex area in which customers need expert advice and a certain amount of hand-holding.
But this extra time spent not only provides advisers with a decent regular income, it also helps form a relationship with your clients which will help make them customers for life.