The old adage that protection is sold and not bought has proven to be quite divisive during a number of recent online and offline discussions.
Some people think it harks back to the dark old days of the insurance salesperson – the tied agent flogging expensive policies to a blindly loyal customer base – and that we have progressed to become a more transparent professional industry these days, which we have. And that we are advisers not salespeople.
Others say that the “sold, not bought” maxim is as true today as it ever was. The notion of selling can be interpreted as encouraging someone to acquire what they really know they need but perhaps have not got round to doing, or the extreme of coercing someone into buying what they do not actually want or need.
Selling in terms of protection must surely be along the lines of the former definition, so should it really be seen as a dirty word? You will not find many advisers who say that most of their clients or prospective clients get in contact to request a review of their life cover or income protection. In the vast majority of cases a nudge is definitely needed.
One of my first protection policies sold as an IFA was a life and critical illness policy with Standard Life covering a client’s interest-only mortgage. It was acquired after a nudge from me. My client had a family and a sizeable debt; knew he needed to take out some sort of insurance and needed a steer on the type and structure of the cover and the provider. That was 14 years ago and the policy recently expired. Was the policy sold or bought? Typically, I would consider the concept of protection needing to be sold but the rest of the process being advised.
I often remark to clients I hope the premiums on their protection policies are a waste of money. This is, of course, a precursor to a discussion about peace of mind and a sense of responsibility. In this instance my client should be delighted that he and his wife have not needed to claim on their life and CI policy during the last 14 years. However, this emphasises the difference in selling/advising protection compared with other areas of advice. We are encouraging people to commit money towards something that they hope they will never need and that challenge should not be underestimated. What price peace of mind?
Fourteen years on and for a variety of reasons my client in question still has a fair-sized mortgage. He clearly understood the peace of mind and responsibility theory because he was keen to put replacement cover in place, which we have done. Along with Standard Life no longer being active in the UK protection market, there are far too many other changes to mention which have taken place over the last 14 years. The key changes, however, are that I have arranged two individually owned polices as opposed to a single joint life policy; the case was outsourced for full telephone underwriting (via LifeQuote) and I proudly did not recommend the lowest premium.
The term of the new cover was set to run for 10 years to coincide with my client’s planned retirement so apart from hoping they clear their mortgage debt by then, I hope this sold insurance will also prove to be a complete waste of money.