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For whom the bells toll

Picture this. I was chatting with my partner over dinner and the conversation came round to work. My partner asked: “What sort of life cover do you do?” With enthusiasm, I explained a bit about differing types of cover. Perhaps surprisingly, she asked me to explain further, so I talked about LTA, DTA, FIB, CIC, WOL, IP and so on.

I saw her look of interest grow into bewilderment. “That sounds complicated,” she said.

“Well, you did ask,” I replied.

Now, my partner is intelligent and degree-educated and works in a high-powered, influential local authority role dealing with central government and education policy. However, it occurred to me that the sheer variety of options, with each provider looking to differentiate its products with bells and whistles to generate adviser interest, might be what stops more protection being sold.

When the supporting documentation is sent out, the client is further befuddled with industry jargon and complex explanations of how benefits are calculated and paid out, varying indexation calculations, guaranteed insurability options and USPs, different trust options, medical conditions, variants of malignancy and so on.

Whenever I read a key facts document from an insurer, my heart sinks. Before I get to the bottom of it, I have trawled through a wealth of corporate and legislative speak. It is no surprise when clients ring for help to understand their cover.

Is it really a wonder that protection has the perception of being the least sold element of all financial planning? The industry does itself no favours. Despite the FSA trying to advocate plain English initiatives, we simply cannot get it right. Clients fixate on the price because they cannot understand the benefits and presume all policies are the same.

For its part, my firm has put enormous effort into tackling this in a product-led way with the development of Real Life Cover which covers all an individual’s basic needs in one policy and is particularly suited to younger lives with no protection – first-time buyers, if you will. However, one product cannot crack this problem, we need more joined-up thinking and greater clarity and consistency from those who represent our industry. Consistency does not mean removing competitive edge. I am not asking for insurers to stop creating USPs, just to make them more easy to comm- unicate and for me that means more focus on client types, not risk types. Providers need to think less like actuaries and more like manufacturers of consumer goods.

This will take for ever if the Association of British Insurers leaves it to individual firms. It needs to make the case that the protection gap is more important than any savings or investment gap and that protection needs to be better promoted.

Educate the masses by showing the clear benefits of protection to the young, the middle-aged and the old. The ABI should quietly challenge members in a drive for clarity of product descriptions and wordings in all literature and communications.

Whoever coined the phrase “simplicity sells” was bang on the money. If we want transparency for our clients, let us communicate simply and stop the glazed eye looks.

Duncan McMillan is head of sales at Lifesearch


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