Protection should always be on the menu
27 July 2015
With so much commentary in the protection market focussed on simplified advice, simplified products and direct-to-consumer propositions, the importance of the intermediated sector should not be overlooked. Similarly, neither should financial advisers overlook the importance of life and protection products for their clients.
One useful tool at the adviser’s disposal is the protection menu plan. Menu plans have been around for a long time but many advisers still source protection cover for clients on an individual product basis instead of reaping the benefits of rolling the core covers into one policy.
Reducing the admin burden
First of all there are significant time-saving advantages with using one policy from one provider for all of your client’s protection needs as opposed to sourcing each cover with different insurers. This means that you will also have only one application form to deal with and your client will pay only one policy fee. In addition, if they need to add another cover within a year of taking out the policy, the likelihood is that only a short form would be required.
Providing more comprehensive cover
But the main advantage of using menu plans compared to the price-driven model is that the adviser avoids the ‘either/or’ debate when it comes to choosing the right type of cover. Working-age people are more likely to suffer illness or disability that prevents them from working than they are to die, yet 44% fewer critical illness policies were sold than term assurance in 2014 and 79% fewer income protection policies. Persuading a client to take out three policies – life assurance, critical illness cover AND income protection insurance may be more difficult than offering them one plan that covers all their needs.
Receiving good service
The professional firms that are serious about protection and financial planning have the ability to deliver greater value than the price-driven model by writing a wider range of cover delivered through higher-quality products. In all this the service that advisers and their clients receive from their chosen providers is paramount. In previous service satisfaction studies we have found that as a general rule, advisers seem to be more satisfied with specialist, quality-driven protection providers than those that aim to offer the keenest rates.
We are refreshing our protection satisfaction study at the moment and your views on the service you received from your chosen protection providers is very welcome. Please take part in our survey – you even have the chance to win one of three cash prizes.