Protection
Boost your income, protect theirs
Income Protection is vastly undersold and fewer than 20% of the working population is covered but why should brokers sell it?
by
Ed Stuart- Brown,
head of protection sales, Friends Provident
Income Protection (IP) provides valuable
cover, paying a benefit if your client is unable to work due to an illness or accidental injury. One in four British parents with young children has no savings or investments to use in times of difficulty and a third of families could not survive a month if their income stopped. Despite this, less than 20% of the working population has any form of Income Protection and the protection gap for IP stands at an estimated £190 billion. Income Protection is vastly undersold and as such this market offers a good opportunity for you to diversify and boost your income stream, whilst simultaneously providing a better service to your clients.
The CornersTone of finanCial Planning
When protecting your client’s mortgage, you might encourage them to think first and foremost about the need for life cover, but is this the right approach to take?
Financial planning has tended to focus on making provision for the consequences of dying too soon (life cover) and living longer than previous generations (pensions and investments), but what happens to financial plans such as these if things go wrong for the client, such as ill health or accidental injury? How will the premiums or contributions be paid? This could include premiums for the life cover to protect the mortgage as, in reality, a lot of life cover is still written without waiver. IP can help provide funds for your clients to continue to meet the costs of savings, investments and pensions. If incapacitating illness or accident strikes, IP benefit can not only help to pay day- to-day bills, but also can fund premiums and contributions to financial plans such as these.
Income Protection should therefore form the foundation of financial planning upon which all other policies are sold.
how To sell inCome ProTeCTion
The economic downturn has prompted many people to pay more serious attention to their future financial plans. A new more financially-savvy breed of individual has emerged from the
recession who should be more receptive to the need for protection. Although clients may well be more
receptive to the need, actually getting them to commit to paying for it may be a more difficult leap of faith! For those of you who may be new to selling protection products, having a robust sales process in place, which will help you counter those commonly cited objections thrown at you by your clients, is vital to ensuring you close that sale. The key to selling Income Protection is demonstrating to clients how important their income is and how it underpins everything in their lifestyle. It’s all about understanding what matters to them and what they wouldn’t want to give up. Completing a budget planner is a must. It allows you to understand and paint your client’s financial picture. It helps you to identify all of their outgoings, enabling you to better understand their lifestyle and how this would be impacted without adequate protection in place. By understanding in detail all of your client’s outgoings you can more easily counter the ‘I can’t afford it’ objection. If they are paying a monthly fee for a satellite TV subscription for example, or a monthly premium to insure their beloved pet cat and they
34 mortgage introducer JUNE 2010
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