Protection Protect your clients’ lifestyle
Why are people so happy to protect themselves against everything except for their income? However this does present opportunities for advisers
by Ed Stuart- Brown, head of protection sales, Friends Provident
Despite the tough economic times, more people are expected to travel abroad this year compared to the stay at homers of 2009. This year 12 million adults intend to take a family holiday, 10 million a beach holiday, 6 million a city break and 5 million an all-inclusive holiday. A large proportion of those people
are likely to either have travel insurance already or take it out for their stay. 81% of people have said they have a travel insurance policy. Why is it that such a high proportion of people will pay to take out a travel insurance policy to cover two weeks of their lives, but only 29% of people take out Income Protection (IP)? The main reason these individuals cite for taking out travel insurance is to protect them against the financial implications of injury or illness abroad. Surprisingly the top reason for taking out travel insurance is the same reason we sell and promote income protection. So why are people more willing to pay
for a travel insurance policy than an IP policy? The answer could be because it’s
become an automatic part of their process
of booking a holiday. It’s on the checklist of ‘must dos’ before they depart – alongside getting the passports updated and visiting the Bureau De Change to get the foreign currency.
It seems to have become the
norm even though only 3% think it is compulsory. Even people travelling to EU countries, where many of their hospital bills would be covered, still take out this extra cover. Yet there is a real conundrum here, 59% don’t think they are more likely to suffer from an accident, injury or illness when abroad. If we are ever going to tackle the £190
billion Income Protection gap we need this same mindset applied to other life events which could impact on someone’s finances and lifestyle, for example, getting married, starting a family, changing jobs, etc. We need to convince people of the need for Income Protection. If families and individuals understand that their lifestyle, including all their holidays abroad, are completely reliant on one thing, their continuing ability to earn an income, they would be more likely to want to protect it and IP will become more of a ‘must have’.
For the short term rather than the long term It is concerning that people place such an emphasis on the short term rather than the long term when it comes to their well being. Having insurance while they’re
abroad is a good thing and may cover the expenses that they incur if they suffer an illness or injury while abroad but what happens if they return home and perhaps become unable to work due to illness or injury, how would they pay their bills? They will find it a real struggle to
make ends meet and if the absence is prolonged the very last thing they will be worrying about going forward is holiday insurance and holidays abroad will be one of the first things to go!
the well known objections Objections that are normally raised by clients when being sold an Income Protection product include relying on employers’ sick pay, savings and the State. When asked the question ‘how would you survive if you were unable to work for six months?’ only 27% said their employers would provide sick pay if they were unable to work for 6 months. Worryingly, 16% said they wouldn’t be able to cope financially, 12% would have to dip into their savings, 11% don’t know how they would survive, and 9% would have to borrow money from friends and family. Only 13% said they could fall back on a protection insurance policy. Many people assume they could rely
upon State Benefits to cover any loss in income but with some people only receiving £91.40 a week from the State,
38 mortgage introducer SEPTEMBER 2010
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