Amanda wrote recently about those clients who need a little tough love – the ones who arrive at your door knowing how much cover they want and why they want it. What they seldom know is how much cover they actually need, what type of cover they should choose and the range of benefits available in the market.
Browsing the internet might appear to get your customer the best price, but what it doesn't do is make the best recommendation for their needs.
Let's consider a plan for a non-smoking couple, both aged 30. They might come to you having made the decision that they want £100,000 joint life cover and £25,000 of joint critical illness cover.
They realise that £25,000 of critical illness cover may not pay off their whole mortgage but it could fund their mortgage payments for a few years, allow them to make alterations to their home or pay for immediate private treatment. And this smaller amount would cost considerably less than taking out £100,000 of critical illness cover.
If you build the plan they choose with Royal London, it might cost £23.781.
The problem with this set up is that after a successful claim, the critical illness plan would terminate leaving the partner with no critical illness cover. For example, if the wife has a heart attack and successfully claims, her payout may give them enough money to help make the mortgage payments for a while but they no longer have critical illness cover for the husband
One of the benefits of the advised sale is that you can show your clients how they can double their cover for just 62p each month – and who wouldn't want to take advantage of a deal like that?
So, going back to the couple's original decision, they want £100,000 life cover and £25,000 critical illness cover. What they may not have considered is insuring themselves as separate lives, and doubling their cover.
As an adviser, you can use the flexibility of a menu plan to recommend the couple have separate life and separate critical illness covers. Instead of just £100,000 joint life and £25,000 joint critical illness cover, they now have a plan with £200,000 life and £50,000 critical illness cover between them. And if you recommend this plan with us, it could cost as little as £24.402 – just 62p more than the original quote.
Now if the wife has a heart attack, and makes a successful claim, the family still have critical illness cover for the husband, and both life covers to fall back on.
The beauty of a menu-based product is that you can combine covers, terms and amounts to create a plan that's tailored to your clients' individual needs.
We appreciate that life doesn't stay the same though. Menu products make it easy to pick and choose types of cover and the level of cover, and change them as your client's circumstances change. You only have one quote to run and one application form to fill in, and your client only has one direct debit to keep track of.
1 Quote based on two clients, both non-smokers and both aged 31 next birthday. £100,000 joint life cover and £25,000 joint critical illness cover, both guaranteed rates and increasing lump sum, increasing at RPI. 25-year term. Royal London Protection, April 2016.
2 Quote based on two clients, both non-smokers and both aged 31 next birthday. £100,000 life cover for each person and £25,000 critical illness cover for each person both guaranteed rates and increasing lump sum, increasing at RPI. 25-year term. Royal London Protection, April 2016.
Senior Protection Marketing Manager
Ross joined Royal London in May 2014 as Senior Protection Marketing Manager bringing with him 16 years’ experience in financial services. He has held various marketing roles during his career and has experience working across a number of markets including savings and investments, individual pensions, workplace pensions, platforms and most recently protection. He has a keen interest in behavioural economics and how this can be applied practically to change consumer behaviour in financial planning.