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Complete the protection treble for your clients

Simon Halifax, Senior Marketing Consultant, Royal London

April and May are notoriously known as the critical months of the football season, or “squeaky bum time”, as it was once famously referred to.

And with current talk of teams winning a unique treble in both England and Scotland I thought I’d talk about the protection treble of life cover, critical illness cover and income protection.

Of these three, life cover is the most popular as it’s generally linked to a mortgage, critical illness is usually added as part of a combined life or earlier critical illness plan and income protection usually an afterthought or the unused substitute.

But by taking a holistic approach to these covers, and including all three as part of a multi benefit approach to protection using a menu plan, you can cover a number of potential risks and help keep valuable cover in place for your clients’ – even in the event of a claim or claims!

The perfect formation

As we’re more likely to be off work for an extended period of time for either sickness or injury than we are to die1, it makes sense to make income protection the starting point of any protection conversation.

One approach is to help the client understand their basic essential monthly outgoings. Understanding this figure is important as their essential outgoings could be different to what expected.  Adding enough income protection to cover these outgoings could allow them to focus on themselves and their well-being should they be unable to work through a long-term illness or injury.

You may also want to understand your client’s level of savings as this could determine the chosen deferred period.  If they have enough savings to cover 3 months, a 13 week deferred period might work.

For critical illness, survival rates for cancer, cardiovascular disease and stroke are improving2 so even if you have a client who’s unfortunate enough to be diagnosed with a serious illness, the good news is they’re likely to recover.  However, this might result in an extended period of time away from work. Adding critical illness cover to a plan, if only to give them enough cover to take a year off could allow them enough time to recover with fewer financial worries.

And, finally life cover. Although the least likely event to happen during our working life2, it’s something that we should be prepared for – particularly if there’s a mortgage. Because many life cover plans now include a mortgage guarantee this could allow any remaining family members the financial stability to remain in the family home.

A more detailed example covering the points raised above can be found in our benefits of the menu sales aid.

You don’t have to be on £250,000 a week to afford this type of cover!

We appreciate most clients will have a budget in mind when discussing protection, so there could be a perception that having all three covers on the same plan would be expensive. But having some protection, or even a little bit of each of the three covers is better than none. And it could be less expensive than you and your clients may think.

Plus regardless of any budget constraints there are a number of ways for you to tailor the cover ensuring it fits. For example, you could reduce the payment period of their income protection plan to five years rather than the full term. This would enable you to give your clients the valuable cover they need for their income.

Protection on all fronts

Yes, of course this is a very quick and high level approach that may not work for everyone but hopefully it gives you enough food for thought to see how combining a little bit of each type of cover can provide an affordable and suitable protection umbrella for any unfortunate event that any of us could face in the future.

And in the event of any potential claim or claims (as could be more than one in this instance) your clients could very well believe that you’re a financial adviser at the top of their game.

Sources:

1 The Institute and Faculty of Actuaries’ Continuous Mortality Investigation insured lives incidence rates. Incidence rates for the entire population may be different to those lives that take out insurance products.

2 CRUK, Cancer survival statistics, accessed April 2019. British Heart Foundation UK factsheet. November 2018. Stroke.org.uk. State of the Nation Stroke statistics, February 2018.

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