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Have we forgotten how to be positive about protection?

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I’ve been doing this protection lark for some time now. It is twenty years since I became a mortgage adviser on the high street selling protection alongside loans, and nearly 15 years since I became ‘employee no.10’ at a little firm in London called LifeSearch.

One thing that was and still is great about LifeSearch is the positivity, something that it seems is lacking across the industry of late.

I sometimes wonder if we’ve forgotten how to be positive.

The troubling thing is it’s a self-perpetuating circle – the more negative the industry is the more everyone believes it. The more everyone believes it, the more negative people become. The more people say protection is boring the more people think it is boring. The more talk there is of falling sales the more sales will fall, and so on.

Let’s take Income Protection as an example. Poor sales yet it’s the product everyone should have. Life cover outsells IP by ten to one but we know most people won’t die during the policy term, yet they might however be off work for a while, making IP a much better product. It’s time Cinderella came to the ball. It’s all been said before too many times to mention.

But let’s think about it differently. There’s around 20m working adults in the UK. Half of which wouldn’t realistically benefit from, nor purchase IP, either because they are far too rich, or the opposite. That leaves us with a realistic target audience in the region of 10m. Over 4m have IP either personally or through their employer. 40 per cent of the market ain’t too bad. Yep – if we can sell 1m life policies a year we should be able to sell 1m IP policies a year, but if that were the case there would be nobody left to sell to in about six years time.

The same point could be made about so called protection gaps and I love it when I see insurers talking about the cover people have got as opposed to what people haven’t got.

So let’s get positive.

The protection industry has a lot of good news to tell people. A little bit of positive thinking might just go a very long way.

 Kevin Carr is chief exeuctive of Protection Review and managing director of Carr Consulting & Communications

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. “I believe in life assurance”. One of the top life insurance salesman in the U.S. said this every single day to himself. While agreeing with the tone of the article I think we need to say the same thing ourselves. For those like me who have been around a little longer, we remember the feeling of taking a cheque around to a bereaved partner. You cannot do much for the departed but you can help the survivors and dependents.

    I believe in life assurance and CI and PHI…..

  2. Kevin, IP is an awful product and is not fit for purpose.

    No one wants to cover 50% of their earnings! it’s expensive and underwriting is difficult to say the least.

    Stop saying sales are bad, no one wants to buy a chocolate covered turd.

  3. The problem with IP is that people don’t want it. The situation is akin to Kitchen Nightmares where a delusional owner thinks the food is great but the restaurant is empty. If people aren’t buying, then you’ve got to question the product. Either that or wait a generation and hope to change peoples’ mindsets. When people look at insurance they look at it as if they’re playing the lottery. It’s as if they want to win, and if they’re going to win they want to win big. Life insurance looks like best value as it’s hitting the jackpot for a low initial outlay. Critical illness comes second as it’s still a lump sum payout. For the same or even higher cost, they could get a monthly payout with IP. It just doesn’t excite them. In a survey people were asked if they would take £100 now or £200 in a month, and most would take the £100 now for instant gratification. Put simply, the product needs to change, as you’ll find it hard to change the way people think.

  4. Very well put. Kevin, IP is great product for providers, very profitable.

    Get real, it’s rubbish and no one is buying it.

  5. Some companies have managed to make in roads with IP but only after changing the product. I agree with the article in that IP is the product that most people should have if they are going to have anything (simply as it’s the one most likely to be required to pay out). However, i also agree with the comments that suggest it is too complicated, expensive etc. Those who really need it, manual workers with no sick pay, are often priced out of taking it.

    All the above is my opinion only as usual.

  6. I agree Nick, I sell loads of it. It’s such a poorly designed product.

    Look at relervant life? That product should sell in boat loads – and it does.

    Most folks have little NDI, (look at any research) so they earn £2,000 spend £1,980 a month.

    The advice is then to cover £1,000 ? There stil in a boat load of trouble.

    Yes I agree, part cover is better than nothing, that’s not a great argument to spend £100 a month circa on protection.

    CIC then appears a better option.

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