As we move into a new decade, there couldn't be a better time for advisers to be looking at the protection needs of their clients, old and new.
For advisers who have shunned the protection space until now, there are real opportunities both to earn, and to make a real difference to so many peoples' lives.
Most people have a need for protection in some shape which is why this continues to be such a large and potentially fruitful market. The challenge is helping potential clients to recognise the importance of protection so that they can make informed decisions for themselves. Protection needs will vary depending on what stage they are in their life, their existing financial commitments, their work, and whether they want to pass on their assets. This might involve:
• Paying off mortgages or other loans
• Protecting income
• Providing an income for the family
• Paying for medical treatment
• Paying an inheritance tax bill
For businesses, this will mean:
• Protecting profits
• Paying off loans
• Succession planning
The Decision-making process
There are many reasons why people fail to ensure they have adequate protection and common objections are:
• High perceived cost for little value
• Belief that it won't happen to them
• Other financial priorities
• Ignorance of the risks
• Lack of understanding of the consequences of not having cover
By asking open questions the adviser can help the client discover their own needs and wants. The more the customer considers the issues they themselves have raised, and their impact on them and their family, the more important they'll become - potentially increasing the chances of a decision to buy protection.
Examples of open questions are, ‘What would happen if...?. What would you like to happen if..? How would you cope if...?'
Fact-finding
The most effective fact-finding processes have the following key elements to get a client to appreciate their protection needs, and want to do something about it.
At the start of the meeting, outline what you are going to do.
Gain permission to ask challenging questions, explaining this is so you can provide the right protection advice.
Establish what protection plans you client currently has.
What does having these plans mean to your client? How important are they?
Question where they would ideally be financially if the unthinkable should happen?
For example, the main income earner is diagnosed with a critical illness. Test the importance of their answers by asking - ‘How important is that to you?' ‘Why is that so important?'
‘How are you going to achieve this?'
Now you know what they want, ask them ‘Where's that going to come from?' and clarify using ‘How will that work?' Help clients identify, take ownership and action if their current plans are inadequate or inappropriate.
What's the best route right now?
Agree what solutions should be taken forward and tailor them to meet their needs, either fully or partially.
Explain the next steps in the process.
What needs to be done, by who and when?
Identifying the right clients
We can probably group potential clients as follows:
• Singles or couples without children
• Singles or couples with children
• Mature couples
Singles or couples without children
They live for the day, enjoy the rewards of hard work and spend to match their income. Even with no dependants, there will still be a need for life assurance, critical illness or income protection.
What they could care about - the ‘protection triggers'
• Continuity of home life
• Protecting their lifestyle
• Protecting their mortgage
• Looking to the future
Without protection, they could face a loss of income and an inability to pay the mortgage or make changes to their home. There would likely be an immediate impact on the lifestyle they cherish so much. A serious illness may mean they can never work again, or carry out the job they were trained for.
Singles or couples with children
The protection triggers
• Effect on their children and their future
• Continuity of home life
• Protecting lifestyle
• Protecting the mortgage
• Looking to the future
Without protection, this group face a number of potential problems. Inability to work, and therefore earn, endangers the mortgage, lifestyle, ability to make pension provision and causes a major issue for the children who are likely to be young and in education. Premature death or serious illness has similar effects, removing an income and leaving debts such as mortgages and loans with little prospects to clear them.
Mature couples
The protection triggers
• Continuity of home life
• Protecting lifestyle
• Protecting the mortgage
• Looking to the future
• Protecting retirement
• Effect on the children's legacy
This group faces many similar issues to the previous group such as inability to work, and therefore earn, endangering the mortgage, lifestyle, ability to make pension provision and a loss of the children's legacy. Premature death or serious illness has similar effects, removing an income and leaving debts such as mortgages and loans.
There are some key questions to be asked whatever the client. It's important to talk about their plans for their children and to build their confidence in your understanding of their lifestyle and long-term priorities. Clients should be asked about their dreams and aspirations and the point made that protection could help safeguard these.
For advisers who want to get into this market for the first time, or refresh their sales skills, Zurich has created a pack of the best sales skills in the market place today.
To find out more visit www.zurich4protection.co.uk
