I have a client who has no protection and wants to change this, but price is a major factor. She is well aware of the cut down products as offered by bancassurers, however, I feel a fuller product would be more suitable. What are the definitive sales techniques to persuade her to spend more on a full size product, and is a comprehensive product always best or can a cut down policy be the best fit?
Mark Jones, LV=
As ever it's a discussion about priorities. Does she recognise the unused gym membership is the price for self insurance? Of course it's important to ensure your recommendation is affordable but the question for her is ‘can she afford not to have comprehensive cover'.
There is a high probability that her main need is to protect her income and full income protection (IP) isn't the cheapest option. However, her knowledge of cut down products from bancassurers is not necessarily a barrier.
The cheaper product will pay out for a maximum period of maybe two years which is very likely to be longer than she has ever been ill, but is she aware that half of IP claims on comprehensive products last for five or more years? The price is lower but how will she fund herself after two years when the benefit ceases and she still cannot work; state benefit?
There are many other aspects that can be explored including own occupation, rehabilitation benefits that comprehensive products provide and the implications of reviewability.
If the client accepts the power of your argument then great, there is the glow of a job well done. If not, have you failed?
You can source a product that will be at least the equal of what she saw in a bank and she is purchasing in full knowledge of the risks, or the amount of self insurance she is taking on. She will leave your office better protected than when she entered, better informed and hence aware of the value you add to this process. That must be a positive for referrals, persistency and a long-term client relationship.
Matt Morris, Lifesearch
In the current economic climate everyone is looking to keep a tight rein on their budgets. It is important for the adviser to explain to her that quality and value for money should be her main concern when buying a policy, not simply buying the cheapest.
To cut costs, but still guarantee she will take a good quality policy, she should look at buying a policy that pays out an income rather than a lump sum. The premiums are less, but the policy can potentially pay out more. Family Income Benefit is an optional life insurance policy because it pays out a regular income on death until the policy expires. Similar income policies exist for critical illness too.
Another way to save money on a traditional income protection policy is to buy short term IP. It does not pay out for as long as a traditional policy but it is a better option than ASU, and better than nothing at all.
So, to ensure the client is fully protected she would need Life, CIC and IP which can cost quite a bit. One way to cut down the price is to buy Real Life Cover, which contains elements of all the main covers in one package at a much smaller premium.
Comprehensive products would be in the client's best interests but economic realities mean the consumer will not always be willing or able to do this. As such, the high quality cut-down products are the next best option.
