Life and protection advice: how valuable are additional support services?

25 March 2020

When it comes to the financial planning process, the value of extending the service to include life and protection policies can sometimes be overlooked by advisers. Ben Heffer looks at the range of additional support services available and reviews adviser attitudes to their value.

This article was originally published in IFA Magazine.

Ben Heffer, Insight Analyst (Life and Protection)

By ensuring that unforeseen circumstances are considered and catered for as well as the more traditional investment considerations, advisers can ensure that clients are able to meet their goals in life regardless of certain events which may derail their plans.

These days, more and more insurance providers are offering their policyholders (and their families) additional support services as part of their life and protection plans.

In 2018, Aegon’s High Net Worth & Business Protection Report revealed that more than half of advisers (56%) feel that value-added services make clients more receptive to protection. In recent research by Defaqto, we attempted to dig a little deeper and find out how each of these services sit with advisers.

Table 1 - Which of the following services do you think adds value to your clients?

Source: Defaqto Limited. N=275

For the thirteen different value-added services shown in table 1, we asked advisers to categorise their opinions as to whether each one of the services is not important to clients, simply nice to have, adds real value, or helps them sell more policies.

It adds real value and helps me sell more policies

While an adviser might believe that a particular service has real value to the client, they may not feel it necessarily helps them sell more policies, although it is reasonable to assume that where the service helps with policy sales, the adviser also believes it adds real value too. Table 1 is therefore ordered on the aggregated response of these two categories.

Claims support services is the most favoured of the value-added services considered with 49% of advisers saying it adds real value and 5% saying it helps them sell more policies. Claims support services also had the fewest number of advisers saying either it is not important (just 6%) or it is simply nice to have (39%).

The second most valued service among advisers in this study is a second medical opinion service, which had the highest number of advisers saying that it helps them sell more policies (8%) and with 35% of advisers believing it adds real value.

Mental health counselling service and bereavement counselling service are also favoured by advisers with 35% and 33% respectively believing that they add real value and 6% saying they help them sell more policies.

Virtual GP services also received good support with 33% of advisers agreeing that the service adds real value and 7% contending that it helps them sell more.

Not important or just nice to have

The ‘nice to have’ category is more of an ambivalent response and suggests that the adviser is primarily focused on the insurance element of a proposition. Such advisers may be underestimating the value that such services bring to their clients and are therefore not promoting them. As a result, their clients may not therefore be aware of the support services available.

Those advisers opting for the ‘not important to my clients’ option again may be focused primarily on the insured benefits, but more likely have a client base for whom some of these services are perceived to be less important. For example, high net worth individuals may have no need of debt and money management help and may have access to other support services via private healthcare; similarly, older clients may have no interest in joining a gym or engaging with a health and wellbeing app.

Those services which seem to find little favour with advisers are Lifestyle coaching, Debt and money management and Nutrition advice. These had the highest number of advisers declaring that they were unimportant to their clients.

There was a diversification of support within the results for Gym discounts with a relatively large number of advisers saying it helps them sell more, but also with a significant number saying it is not important to their clients. This exposes perhaps the differences in client bases between those advisers promoting propositions such as Vitality and those with a more traditional client demographic.

Where to now?

Many commentators predict and long for a nirvana where protection propositions have such a positive impact on people’s health and wellbeing that their likelihood of needing to claim within the term is significantly reduced. Indeed, reduced to the extent that the insured benefit becomes secondary to the support functions of the contract and the focus moves to the provision of health and wellbeing services rather than insurance.

Already, the majority of providers offer one or more value-added services as part of their life and protection contracts. According to Defaqto’s Engage database, 64% of providers offer claims support services – the intervention by trained professionals to help people deal with the consequences of a critical illness diagnosis or bereavement at the point of claim; 43% of providers offer health and wellbeing services – where similar interventions are available at all points during the term of the contract and which can head off problems at an early stage reducing the chances of needing to claim; and 51% offer a second medical opinion service.

That support services add value to clients is of little doubt, the issue would appear to be one of positioning and promotion.

For value-added services to become the main element of a protection contract, insurers must first provide these services for clients and their families from day one and establish an evidence base for reduced claims; second, distributors need to position the contracts with consumers with firm emphasis on the health and wellbeing benefits of the plan.

Moving the value-added service from ‘nice to have’ to ‘adds real value’ is the order of the day.

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