If you take five minutes to read this article, six people in the UK will die while you do so. If you take half an hour each week to read Money Marketing, 36 people will die in that time. No wonder Benjamin Franklin could say with confidence that in this world nothing can be certain except death and taxes.
It is hardly surprising that the term insurance market in the UK is more competitive than ever or that it is in the vanguard of the e-commerce revolution. A number of providers now give IFAs an online term insurance quotation and application service.
What is perhaps easy to overlook is that term insurance also continues to provide a rich seam of business for IFAs. It has seldom been seen as a difficult sale for IFAs, particularly when linked to other products such as mortgages or business and personal loans.
An equally good business opportunity for IFAs, which is sometimes easy to overlook, lies in the potential for rebroking term insurance. At first glance, it may hardly seem worth the bother.
With term insurance rates at such low levels, the benefits to clients may not be obvious but they are real nonetheless. Rebroking provides four key opportunities for clients and IFAs.
It gives IFAs the opportunity to contact clients with the positive message that they can secure a substantially reduced premium for the same level of protection, either with the same provider or a more competitive provider.
It gives IFAs and clients the opportunity to identify a more comprehensive term insurance policy for a similar level of premium. This could involve the addition of important features such as terminal illness benefit or waiver of premium benefit.
It gives IFAs and clients the opportunity to augment existing term insurance policies with some other form of protection policy relevant to the client's needs.
It gives IFAs the opportunity to reassure their clients that they are proactively looking for the best deals available in the market.
In each case, there is also a commission opportunity for IFAs involved in setting up a new policy where appropriate. But how can IFAs best go about the process of rebroking? There are five key stages in the process.
The first involves prospecting. IFAs need to build a list of rebroking prospects from among their lists of clients with level term, convertible term and mortgage protection policies, with or without bolt-ons such as critical illness cover. From that list, it should be possible to identify those clients who were accepted by product providers at ordinary rates and then detail the sum assured, the premium and the current provider.
With this list of prospects and their details, the second stage involves talking to preferred protection providers to discuss what types of terms can be put in place.
Client data is key here. Underwriters and reinsurers will want to profile clients and are likely only to be interested in clients accepted at ordinary rates. They will also want to take into account details of the ceding provider as underwriting stances vary from company to company.
The third stage has to focus on the rebroking campaign strategy itself. This involves deciding which clients to target based on criteria such as age. It also involves seeking agreement with the protection provider on practical issues such as the number of medical questions the clients will be expected to answer.
In conjunction with the protection provider, it is best to develop bespoke materials for the campaign, such as proposal forms, and determine how clients are going to be contacted, for example, by post, phone or email.
Ideally, a campaign should be staged over a couple of weeks with much of the contact focused on the later part of each week so the clients can use the weekend to consider their options.
As with all campaigns, it is the follow-up that is key. Allow sufficient time to speak to each client. He or she may not be interested in rebroking their term insurance cover but may be interested in topping up their pension. Either way, it is a business opportunity.
In any mailing, there is value in considering whether an incentive, such as vouchers of some kind, would be more likely to elicit a response from your clients.
In many ways, the fourth stage of client service is the most important – and most difficult – to get right. Attention to detail is obviously key.
Named contacts within providers' service teams can usually help with this. But issues such as whether it is possible for providers to hold cover for clients wanting to rebroke are important in case the client jumps the gun and cancels cover with the old provider before his or her case is processed.
It is also important to check whether the old policy was in trust because that implies the rebrokered policy should also be in trust. The client's circumstances could also have changed so that the new policy should perhaps be written in trust even though that may not have been appropriate for the previous policy.
After the process is complete, there is always value in a follow-up call to the client to ensure he or she is satisfied with the service that has been provided.
The fifth and final stage is to review what worked, what did not and also to identify how much business, directly or indirectly, was generated by the whole exercise.
Rebroking of term insurance is a worthwhile exercise. Its value to the IFA goes far beyond the generation of commission. It includes refreshing the relationship with the client and demonstrating the unique value that can be added by an IFA.
Moreover, the concept of proactive client management can be extended to other areas. Clients can be reminded, for example, when their existing term insurance policy is due to expire. All in all, therefore, rebroking term insurance is a valuable exercise.
It enables the IFA to develop a value-adding service for clients that is founded on a more holistic approach to the management of their finances. That is good for the clients and good for IFAs.