Five Ways to Help Your Clients Stay Financially Resilient


Gregor Sked, Midstream Development and Technical Director, Royal London.

With 95% of UK adults worried about the rising cost of living* according to a recent study by Royal London, are protection policies likely to be scrapped to save a few bucks?

Whether it’s the price of fuel at the pump reaching record highs¹ or the fact that we see inflation hitting a 30-year high², there’s no denying that UK household finances are stretched beyond lows. that many will never have seen in their lifetime. And with nine out of ten planning to make changes to pay for their rising cost of living³, what can we do to ensure protection policies don’t become one of those changes?

This is unfortunately a challenge that many advisors I have spoken to over the past few months face when times are tough. Customers looking for simple ways to lower their monthly expenses often turn to insurance policies. After all, it’s not tangible and they may have forgotten what they’re paying for.

So what can you do if customers are looking to cancel their policy or if you’re having a harder time discussing coverage with potential customers?

1. Remind them why they bought the policy

It might be a few months since you last talked to them about protection, so why they saw the benefits might be a distant memory. A gentle reminder of what their policy covers to allay concerns about where their monthly levy goes?

It doesn’t matter if they have taken out mortgage protection, income protection, critical illness cover or even a family income allowance. You had the discussion to make sure they could either pay off their debts or maintain their standard of living if something unforeseen happened. While money might be more of a concern right now, has the need to pay off debt or maintain their lifestyle changed? Have the risks they face changed?

2. Reinforce the value of their policy

I mentioned earlier tangibility, a hurdle that our industry has often faced since its inception. How do you engage customers with something that’s usually an unpleasant conversation to have, but also isn’t something you can see or touch?

Many of the products and services available in the financial industry these days offer some form of tangible aspect; from the possibility of connecting online to their current account to consulting the value of their pension on a mobile application. But with protection, other than ongoing reviews and support from their advisor, there is little ongoing communication to remind clients of the valuable cover they have.

So if you asked your clients what they consider to be the value of having a protection policy? They might say it’s peace of mind knowing that if they are absent due to illness or become seriously ill, they will receive a sum of money to help them and their family. But will that always be enough when times are tough?

Collaborating with the rising cost of living is the consequence of the pandemic. And many would suggest that the long-term ramifications of the virus and government measures haven’t even scratched the surface yet. I came across an article which suggested that the official waiting list for NHS mental health care in England stood at 1.6 million people – of this number there were 374,000 under 18⁴. Even getting an appointment with your GP remains an uphill battle for many with average waiting times for non-emergency face-to-face appointments around 9 days⁵.

The good news is that most providers today offer access to some form of additional support services that can offer some assistance, such as mental wellness apps, 24-hour virtual GPs and 7 days a week, dedicated nurses who can refer clients to treatments and therapies that match what is received from the NHS, and even legal and recruitment services. Some providers even allow customers to access these services without having to make a complaint and extend the services to the partner and children of the covered person.

Reminding customers that they have access to these valuable services, often at no cost, could be the difference between canceling a policy and keeping it in place.

3. Talk about sustainability

We all see the effects of inflation right before our eyes. Going back to the Royal London cost of living study, respondents said rising energy bills, weekly groceries and phone and broadband costs top the list of concerns that UK adults currently face³.

This could be a good way to steer your clients’ conversations towards income protection. How would a customer pay for these necessities if they were on sick leave? And with the added burden of inflation, do they run the risk of having to make even more cuts if they were to miss work for a long period of illness?

When it comes to future-proof coverage like income protection, consider adding indexation to the policy. This allows customers to maintain the true value of their protection over time. Thus, if a claim is to be made in the future, the value of the benefit will better reflect their standard of living at that time.

4. Consider a lifestyle review to help you stay affordable

It might be worth considering if a provider would consider a lifestyle review? If a client has changed their lifestyle, occupation or recreational activities and you believe this reduces their claims risk, some providers may be able to revise the terms of the policy, which could result in a reduction in their premium.

5. Discuss the long-term implications of cancellation

The most important implication of canceling the policy is how could customers pay off their mortgages or maintain the standard of living they are accustomed to if the worst happened? But also, canceling their policy now could mean an increase in the cost of taking out a new plan in the future. Why not remind clients that the cost of taking out policies such as life insurance, critical illness insurance or income protection will generally increase with age.

Take a look at the range of tools and resources we offer to help you have successful protection conversations with your clients and build your financial resilience.

Sources:
* 9 in 10 adults make tough spending decisions amid high cost of living anxiety, Royal London Cost of Living Survey by Opinium for Royal London, March 2022
1 – Diesel rises again to record £1.76 a litre, BBC, March 2022
2 – As inflation hits 30-year high, UK households begin to tumble, Reuters, February 2022
3-9 in 10 adults make tough spending decisions amid high cost of living anxiety, Royal London Cost of Living Survey by Opinium for Royal London, March 2022
4 – Pressure on mental health care leaves 8 million without help, say NHS leaders, The Guardian, August 2021
5 – Waiting times for GP appointments roughly halved since pre-COVID, Pulse, August 2021

About the Author:
Gregor’s exposure to financial services began in 2011. He spent most of his early career at Standard Life, where he was a presenter on the pension plans engagement team. workplace retirement. He joined Royal London in 2018 to devote more time to middle market protection. Gregor is involved in the development of consulting content, presentation, writing articles and comments for the press. Gregor is also studying toward a degree in financial planning through CII.

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