Selling your clients life cover helps to make sure they’re financially protected, but does it go far enough? Using a more holistic approach to their protection needs means that you’re not only giving them complete cover, but you’re treating them fairly too. And we can help you do this with the Good Parent Portfolio.
The Good Parent Portfolio helps you talk to your clients about making a will, putting protection plans in trust, and the importance of thinking about guardianship. Issues that most people don't like to think about.
Every day, more than 100 children lose a parent in the UK.1
Most parents would prefer not to think about what would happen to their children if they both died, but unfortunately, it's something they should consider. So one of the most important steps your clients can take in making plans for their children is to appoint a guardian.
We've put together some background information to remind you of the key issues surrounding guardianship.
Discussing this with your clients will help them think about who they'd want to act as guardian for their children.
Who can appoint a guardian?
Any one parent with ‘parental responsibility', or both parents together with ‘parental responsibility'.
Who has parental responsibility if the couple aren't married?
Many think that if one parent dies, the surviving parent automatically has legal parental responsibility. But while this is true for mums, it's not always the case for dads. Look at our parental responsibility flowcharts for details about these rules.
A common way is to put the appointment in a will. The benefit of this is that additional financial arrangements can be included in the same document. Where there are 2 parents, they can appoint a guardian to look after their children if they both died. The Children Act 1989 sets out various ways that guardians can be appointed (the Children (Scotland) Act 1995 contains similar information).
The sales aids explain guardianship in more detail:
1 www.winstonswish.org, September 2016
When you're arranging protection for your clients, setting up a trust can help make sure that the payout from their plan ends up in the right hands, at the right time. It also means it doesn’t get added to their estate and so wouldn’t usually be subject to inheritance tax.
Writing your client's protection plan in trust can put the right money, in the right hands, at the right time. A trust could make sure that if one parent died, the other would have access to the money, but if both died, the money could be held for the children until they're older.
Payments could be made from the trust to the guardian, or to the children directly, to cover the children's living and education costs. If the children are different ages, different amounts could be paid from the trust at different times to suit their individual needs. It would also be possible to invest the trust fund for the benefit of the children.
Even if your client has a will, it could take months or even years to get a grant of probate, which could delay payment of a life cover claim. If a plan is written in trust, the trustees can claim straight away without the need for probate.
We've got you all the tools you need to put protection plans in trust, like our trust chooser and approach letters.
Go to the trusts toolkit to find out more.
73% of UK adults don't have a will.1
The research revealed that 73% of 16-54 year olds don't have a will, while 64% of people over the age of 55 have made their final wishes clear in a will. The research also found that men are more likely to have a will and keep it updated than women.1
When you consider that the average age for our life cover claims was 53, putting it off until later could be a huge mistake.2
Having the conversation about protection and putting plans in trust will also make it easier for you to talk about wills.
You could ask your clients:
There are other things to think about too, like whether the property should be held in trust for the children until they become adults. And whether the guardians should also be the trustees of the children’s fund.
You can ask your client if they’d want to minimise any inheritance tax bill. Inheritance tax can be charged if the assets come to more than £325,000. They can reduce this with a well drafted will.
If your client doesn’t have a will, do they understand the rules of intestacy? Without a will, their property might not go to the person they want it to when they die.
Unmarried couples will have no automatic rights to the other’s property on death. Even if your clients are married, without a will, the surviving spouse may get less than they expect.
The flowcharts in the sales aids below will help you talk to your client about their will.
These sales aids show who would benefit if your clients die without leaving a will.
1 www.lawsociety.org.uk, October 2014
2 Royal London’s UK intermediary protection business claims paid (1 January to 31 December 2015).
60% of people don't have life insurance. 71% don't have critical illness cover and around 90% don't have income protection.1
Without the right protection plans in place, all the other plans that your clients have could come crumbling down. Protection should play a key part in every client's financial planning.
Whether you’re recommending protection to your clients for the first time, or reviewing and updating their plans, they need your advice to get the protection that’s right for them and their budget.
You can point out that in the same way that life cover is important in case one of the couple dies, it’s also key if they were both to die. Covering more than the mortgage is a good idea if they’d like their children to keep the same lifestyle they already have.
With Royal London you can choose from:
Our marketing studio site gives you a suite of sales aids that you can brand as your own, giving you marketing material to help build your protection business. And they are a great way to start the protection conversation.
1 Life and Health Protection, yougov.com 2015.