It is great to see business activity picking up in the mortgage market, but business volumes are still a way below the levels seen before the lockdown started. Unfortunately, when it is super busy protection can often fall by the wayside, so now could be a good opportunity to review your clients’ protection needs. It will be time well spent.
Protection is on the mind
The start of the pandemic saw a huge increase in demand for protection. That early surge has tailed off now, but it demonstrates that COVID has pushed protection to the forefront of many people’s minds. Provided affordability is there, the propensity to buy protection has certainly increased.
On top of this, several insurers have recently come out with statistics showing a significant increase in claims due to Covid. Sadly, LV reported 260 death claims due to Covid and AEGON recently reported an 83 per cent increase in life insurance claims with 31 per cent of all life claims between April and May being related to COVID. As the government repeatedly tells us, the virus has not gone away and a second wave is possible, so now more than ever, it is vital that we ensure our clients are properly protected.
Is now a good time to lock-in premiums?
In addition to a significant rise in claims due to COVID, I recently listened to a talk by a chief medical officer at a major insurer where he stated some very worrying statistics about large falls in GP appointments, cancer referrals and (non-Covid) A&E admissions (even for heart attacks) during lockdown and the serious impact this could have on our health and claims in the coming months and years.
So far we’ve not seen an increase in premiums across the market for new business but it’s not uncommon for an increase in claims to be followed by an increase in premiums, so now might be a good time for your clients to take out protection and lock-in the current rate. Given the current environment, I think it would be safe to say there is more chance of a premium rise than a premium fall over the coming months. This could be a driver to take action now.
Your clients will appreciate you checking-in
The points raised above should highlight the increased need to discuss protection with your clients. It is easy to start with, “I just called to check-in and see how you are” and take it from there. Your clients will appreciate the call, and many will value a conversation about their protection needs.
Even if your client took out cover when you arranged the mortgage, it is still worth checking in to conduct a review. At the time they many have only taken out life cover for the mortgage amount and additional cover is needed for family protection, or they might want to add serious/critical illness cover or income protection.
At Drewberry we regularly conduct protection reviews with our clients, and it is a very worthwhile exercise for both parties. At worst it’s a quick call where everything is fine and their existing cover is still appropriate and at best it involves expanding their coverage or even in some cases, especially with the current economic environment, saving a potential cancellation.
If you feel like you need to brush up on your protection knowledge, the Vitality Life Adviser Website has a load of useful resources and sales aids to help you.
Tom Conner is a director at Drewberry, the London and Brighton based financial advisers. Tom has worked in the health and protection advisory market for 10 years and is a founding member of the Protection Distributors Group (PDG). Tom’s ‘Monthly Musings’ are inspired by his desire to break down complexity and grow the market. Tom shares his valuable adviser perspective on some of the key challenges facing the profession in 2020.
