THE FAMILY PROTECTION CONVERSATION

Transcription

1 THE FAMILY PROTECTION CONVERSATION

2 CONVERSATION STARTERS This information is for UK financial adviser use only and should not be distributed to, or relied upon by, any other person. As you know, people are often well protected when it comes to their goods and possessions insurance for their home contents and mobile phone being high on their agenda. But when it comes to protecting what matters to them most their family there s often a lack of understanding of how important this type of insurance is. We re aware of the protection gap and that this is something that we need to address, but it has always been a challenge to help clients understand the importance of having the right protection in place for their family. Only 40% of people in the UK with children have life cover and 10% have critical illness cover.* Source: *Scottish Widows Protection Research,

3 So how can we change people s perceptions around family protection? How can we make it real for them so they understand the peace of mind that protection can provide? THE FAMILY CASH POINT If your clients had a cash point in their home, they d take out contents insurance to protect it in case it stopped working or broke down, yet they don t think of themselves in those terms. They re the ones earning the money, and then dispensing it to maintain their and their children s lifestyle. They should be protecting themselves so they can protect that cash flow. VALUE OF A PARENT When you think of all the things that a parent has to do, and then try to imagine how much it would cost to have to pay for each of these, the amount would be quite considerable. Breaking it down into separate activities can remind your clients of all the things they do taxiing the children to school and after-school activities, doing the housework, mowing the lawn, and many, many more. When you add it all up, the figure can be quite staggering the typical cost of raising a child born in 2016 to age 21 is 231,843.* That is what your clients are protecting should something happen to them. And this also highlights the importance for families where there is a stay-at-home parent, that they recognise the importance of cover for them, as well as the breadwinner. WHAT ARE THEY COVERING? The term life insurance doesn t always resonate with clients. But life insurance is there to protect the important things in life. By presenting it to your clients as cover for something specific can help reinforce the need. College fee cover, nursery fee protection, mortgage cover the list can go on and on. WHO ELSE CAN PROVIDE FINANCIAL HELP? If your client is diagnosed with a critical illness and can t work, have they considered how they will be able to meet their financial commitments? Will there partner s income be enough? How long will their employer pay their salary if they re off long-term sick? How much will the state provide? How long will their savings last for? Considering the financial impact on their family should they be unable to work can highlight the reason for having protection in place. Understandably, it s not something people want to think about, but the reality is 1 in 2 people in the UK will be diagnosed with cancer in their lifetime and four in five people are, on average, 570 a month worse off as a result of their cancer diagnosis.** When you put these statistics together, it s clear to see how important protection is. Source: * The Guardian, 2016 ** Cancer Research UK, 2017; Macmillan Cancer Support,

4 THE STATE WON T NECESSARILY BE THERE Clients often overestimate, or simply don t know the level of support the state will provide in times of need. However with significant changes to benefits such as child and working tax credits, income-based jobseeker s allowance, income support and housing benefits for those renting and with a mortgage all of which are being replaced by capped Universal Credit this mean families need to do all they can to protect themselves. There is a new bereavement support payment in place now too, which according to research from the Childhood Bereavement Network, it is estimated 91% of widowed parents will be supported for a shorter period of time than they would under the previous system*. Bereavement benefit is also not applicable to co-habiting families, which your clients may not be aware of. And Support for Mortgage Interest (SMI) is changing. From April 2018, it is changing from a benefit to a loan, which means the person claiming will have to pay back the amount loaned on their return to work or sale of the house. And it will also form part of Universal Credit and be subject to the no earnings rule. This means if there are other parties to the mortgage and a spouse/partner is still working and earning, no support will be available. THINGS CHANGE Even after your client takes out family protection, it s important to regularly review their protection needs. Things change they start a family and then it grows, their children go off to university, they move house (maybe more than once), they get a promotion in work. The protection they initially put in place might not meet their needs a few years down the line. A menu plan can often let them adapt their cover and a lot of plans have guaranteed insurability options which will allow them to increase their cover without any additional underwriting for key life events. And if they receive an annual benefits statement, this can serve as a reminder to them of the cover they have in place, helping to trigger the conversation. PROTECT THEIR LEGACY Your clients will want to make sure that their family inherit when they die with as little inconvenience as possible. With a protection plan, they can put this in trust to ensure the money is paid out to who they want it to go to, without legal wrangles or the tax man benefiting. This can give them comfort that their children will be looked after financially should the worst happen. Source: * Child Bereavement Network,

5 HOW CAN SCOTTISH WIDOWS PROTECT HELP? Your client s family is no doubt the most important thing to them, so ensuring they are financially protected will be a priority. With our protection menu plan, we can help you provide the right cover and features to help meet your clients needs, and give them the flexibility to change their plans as their lives change. TOOLS When starting the discussion of the need for protection there will often be a number of objections that you will have to address, and to help you with these we have a couple of online tools our risk analyser tool uses basic client information (age, gender and smoker status) to highlight the likelihood of your client suffering a critical illness and our protection needs tool uses information about your client s personal finances to calculate their potential need for protection. MENU PLAN Family income benefit could be the right solution if they want the security of a regular income rather than a lump sum, and in some instances may be a cheaper option which can help with the challenge of affordability. Our life and critical illness cover policies are all available on a family income benefit basis. This type of policy can help replace any lost income due to a critical illness or death. And it s tax free. Recommending cover on an income basis could help maintain a sense of stability if the worst happens. If your clients are considering cover for their mortgage, they don t have to take this on a decreasing basis. Cover on a level term basis could provide a cushion to help pay the bills and keep the cash-flow moving, as well as paying off their mortgage, should they suffer a critical illness or die. And they should consider indexation, so their cover can keep in line with inflation. Our multi benefit quote and split sum assured functionality allows you to set up more than one cover in one quote, helping you to tailor the quote to meet all your client s protection needs. 3

6 ADDITIONAL FEATURES All our critical illness policies include children s cover up to age 22 at no extra cost, so your clients know there is some financial support available should something happen to their child. We also provide free mortgage cover for new mortgages and free accidental death cover, so your clients have peace of mind knowing they have some cover in place before their policy starts. And we offer a price lock promise where, from the date your client s application is submitted, the price won t change for a period of up to 12 months to when the policy goes in force. FURTHER CONVERSATIONS We send an annual plan summary to your clients, which you will also receive a copy of, to remind them of the valuable cover they have in place. This is an excellent opportunity to carry out a review with your client to make sure the cover they have still meets their needs. ADDITIONAL SUPPORT All our policies include our Scottish Widows Care service, which gives your clients more than just the financial protection they might need. Through our work with the independent nurse advisory service, RedArc, your clients and their families can get the practical advice and emotional support they might need during difficult and traumatic times in their lives. This support is available from the day their policy starts and for as long as they need it. Their team of personal nurse advisers are all highly experienced, registered nurses with a wide range of specialised and general medical knowledge. They offer your clients a flexible service that can be customised to suit exact requirements to give the personalised support required. Our protection policies are flexible and your clients can often adapt them during the term of their policy without having to cancel their existing cover first. Your clients also have guaranteed insurability options on their policy which allows them to increase their sum assured without further underwriting in certain circumstances, including marriage and the birth or adoption of a child. 4

7 FIND OUT MORE For your clients who have families, protection can be essential. This conversation should always be front of mind. And with the range of options we have available, we can help you provide the right solution. For more information on Scottish Widows Protect visit our dedicated adviser website. scottishwidows.co.uk/extranet/ products/protection

8 Scottish Widows Limited. Registered in England and Wales No Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number /17