As bleak as it may sound, death is inevitable. It’s not something most of us like to think about but it is a fact nonetheless. At some point, we will die and that will more than likely have a lasting impact on those we leave behind. Luckily, as an adviser you can ease your customer’s concerns on the subject by reassuring them that there is a protection policy to help with everything in between, ensuring that they, as well as their families, can continue to live a happy life even if the worst was to happen. Following our recent blog where asked and answered the question as to ‘What is a protection adviser?‘, we’d like to delve more into what protection actually is. There are many types of protection policies available, such as:
- Life Insurance
- Income Protection (IP)
- Critical Illness Cover (CIC)
Let’s look at protection more broadly…
WHAT DO WE MEAN BY PROTECTION IN A FINANCIAL SENSE?
In the world of financial services, when we talk about protection, we’re referring to insurance products that are designed to offer different levels of coverage for different circumstances and people. Life insurance for example is a type of protection policy which pays out in the event of the policy holders’ death. In contrast, income protection isn’t quite as definitive as it pays out monthly to help cover a loss of income if the policyholder is unable to work due to injury or illness. While the differences between the various protection solutions are probably second nature to advisers, it is customers who are looking to gain a deeper understanding of the options they have available to them. We have a whole range of protection providers available and each of these offers different protection products to advisers.
WHO HAS PROTECTION?
Strictly speaking, there’s no wrong time to recommend your clients arrange a protection policy and there’s no wrong type of client to ask. As stated previously, everyone will die at some point which means everyone could benefit from a protection policy. Clients who are married or in a serious long-term relationship, parents, homeowners etc. are all ideal candidates for talking to about protection. This is because these types of customers have dependents or regular payments and outgoings, which would obviously be impacted after an injury, critical illness diagnosis or death in the family. That doesn’t mean you can’t still recommend a policy to a client who is single with no mortgage repayments or beneficiaries, as there are still plenty of insurance solutions which will go towards offering much-needed support in simply maintaining their lifestyle.
WHY IS PROTECTION A GOOD IDEA?
Whilst the thought of a member of the family passing away or being ill is unpleasant, there are many illnesses that can knock our loved ones off their feet. It is important to stress to your clients that as painful as it might be to think about, life will continue after their-own or a loved one’s passing, and the premiums they pay towards their protection policy can go a long way in helping with the following:
- Providing for their dependents (children and partners)
- Covering their mortgage payments each month and staying in their homes
- Keeping a regular income to maintain lifestyles
HOW DO PEOPLE GET PROTECTION?
Every arranged protection policy begins with an adviser having a discussion with their clients about what their needs are. Customers are typically asked to answer a range of questions so that their adviser and the protection provider can set up their chosen policy, be it life insurance, income protection etc. It is then up to advisers to help customers decide what is most important for them to protect (e.g., their mortgage, partner, children) and the level of cover (the maximum amount an insurer would pay you and what you are/aren’t covered for) that is right for them and their budgets. Sometimes customers have a combination of policies in place to protect different things so even if you have already arranged a protection policy previously for your client it’s still worth making sure they are aware of some of the other solutions out there, just so they have the choice.
WHAT HAPPENS WHEN PROTECTION IS IN PLACE?
Once the policy is in place, policyholders make monthly payments (commonly known as premiums) to the protection provider. Premium amounts vary due to a range of factors, such as product type and personal circumstances so it is essential that your customer knows exactly what they should expect to be paying.
In the unfortunate event that claims need to be made by policyholders, advisers can help them contact insurers to begin the claims process. If an IP or CIC claim is successful, payments will be made to the policyholder(s) either in a lump sum all in one go or in regular, smaller payments. For successful Life Insurance claims, payments are made to people whom the policyholder(s) nominated to benefit from the payments (the beneficiaries).
WHAT DIFFERENCE DOES PROTECTION MAKE?
We’re proud of our advisers for making sure their customers have the help they need, especially when they need it most. Our Broker Hero stories bring to life the impact that protection have on peoples’ lives. Read them here to discover what protection can do.
Look out for our weekly back to basic blogs and our protection focus blogs!
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