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Rod Macdonald

The following sentence is a summary of the type of sentiment being expressed by many industry commentators at present: “The protection market is set to be the major beneficiary from problems in other parts of the industry – endowment mortgages, stakeholder pensions, plus unit-linked and with-profits investment returns headed in the same direction as Peter Mandelson&#39s job prospects.”

I agree with the sentiment but I would say that, wouldn&#39t I? Yet sentiments on their own achieve little, if any, additional business. How do we turn this tide of emotion into real client action if experience of writing protection business is limited?

The answer that will help IFAs focus successfully on this area is to forget the protection market and stick with the markets they are comfortable with. The best example is the employee benefits market. Although the word stakeholder may make you choke on your first coffee of the day, it still has to be mentioned in dispatches to most business clients.

The underlying message spelt out by stakeholder is one that cannot be refuted: “The state cannot afford to pay a decent amount to pensioners in future.” That message only needs to be amended slightly to say: “The state cannot afford to pay a decent amount to disabled people in future.” That is, if you call £67.50 a week a decent amount now.

With around 90 per cent of the population having no cover aga
inst long-term sickness or injury, promoting group income and critical illness protection is a must. The mortgage and family cover markets also offer tremendous opportunities for increasing sales of individual income protection and critical illness cover. Individual income protection sales increased by 21 per cent last year. Nearly all the extra business written was mortgage-related and nearly all of it was written by bancassurers and direct salesforces.

This shows what can be done with a real focus on a market. Just think what IFAs will be able to do with the same focus – and decent products as well. The abolition of waiver within new personal pensions is another essential reason to sell income protection.

Critical illness cover is a good example of how concentration on a product area can pay dividends. IFAs have increased sales by leaps and bounds in the last few years but nine million of the UK&#39s 11 million mortgage borrowers still have no protection and need cover urgently. Only one million have critical illness cover for their family.

Do not forget pension life cover. Why do 20 times more people take ordinary life cover than pension life cover when 16 million of Britain&#39s 27 million workforce are eligible to obtain tax relief on their pension life cover? The Inland Revenue is making pension life cover easier to write after April 6 but at the same time imposing tighter contribution limits. Whether you are selling life cover before or after this date, make sure you sell pension term if you can. Remember, pension mortgage protection is also available and tax relief really does matter to borrowers for whom every penny counts.

To finally exhaust the stakeholder link, now is an ideal time to step into the viper&#39s nest of long-term care insurance. Regulation is on the way, with Cat standards to follow, and nursing care will be free – maybe personal care, too, if you are planning to advise all elderly clients to retire to Scotland. The state has even taken the radical step of acknowledging that the insurance industry has a role to play in this market. Again, the key message is that the state cannot afford to pay for people who need long-term care.

Embrace stakeholder as a friend and use its message to increase sales – without ever mentioning the word pension.


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