View more on these topics

Term of endearment

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&#39s 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&#39 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&#39s 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.


Invesco axing Perpetual brand on offshore funds

Invesco is to ditch the Perpetual brand on its offshore fund range when the two firms merge later this year. Five of Perpetual&#39s 14 offshore funds will be liquidated and the remainder will be either rebranded under the Invesco name or merged into one of its existing 56 offshore funds. The consolidated offshore range will […]

Don&#39t give away ground in manoeuvring on polarisation

Many have interpreted Money Marketing&#39s remarks on the need for Aifa director general Paul Smee to take the gloves off as a call for a Garry Heath-style campaign. This was not our intention. It might have been better to suggest that, rather than abandon diplomacy, Smee needs to be less diplomatic, as much with product […]

Just 8% of firms know stakeholder start date

Only 8 per cent of UK businesses which are aware of stakeholder pensions know the legislation will be introduced this year, according to research by BACS. The company says among businesses there is a high level of confusion and misinformation surrounding stakeholder, which is launched in April. BACS surveyed 461 businesses across a range of […]

Funding for the future

Total outstanding mortgage balances in the UK stand at just over £500bn, with the industry projecting net lending of £40bn to £50bn a year for the next three years. These massive figures, with mortgages comprising more than 80 per cent of all household debt, mean lenders are faced with developing new sources of funding to […]

HMRC helping to remove artificial gains

An investment bond offers investors certain tax advantages, one of which is the ability to take partial surrenders from the investment. This facility allows the policyholder to withdraw amounts up to 5% of the amount invested each policy year on a tax deferred basis, without incurring any immediate tax liability. This tax deferred allowance can […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm