Protection advice ‘based as much on emotion as claims statistics’: Analysis

Protection advice 'based as much on emotion as claims statistics': Analysis

Convincing customers of the merits of protection policies often comes down to tapping into their emotions, rather than highlighting the high percentage of claims paid, brokers have suggested.

In recent weeks, a succession of major insurers have released their claims statistics for 2021, including the likes of royal london and Scottish Widows, while the Association of British Insurers (ABI) has published data for the industry as a whole.

According to ABI, for example, 98 percent of claims were paid with nearly 300,000 new claims paid throughout the year. Claims for issues related to the pandemic nearly doubled from a year earlier, statistics from the trade body showed.

And while some runners said Mortgage Solutions While these claims figures help them overcome customer cynicism, they argued that there are other barriers to broader adoption of the coverage, such as ignorance about what is included, whether they really need protection, and the likely cost.

dispelling myths

Dominik Lipnicki, director of Your Mortgage Decisions, said there’s a “big misconception” that protection policies don’t pay, but it’s a broker’s duty to show that successful claims are the norm.

He noted that inflation and higher taxes are putting pressure on budgets, which may tempt customers to blow their cover. However, he added: “As an industry, we need to stay in regular contact with clients, making sure they are protected within their budget and requirements, and if these change, so should our advice.”

Bradley Brandon-Cross, chief commercial and general officer, said the claims data helped dispel myths about protective coverage, noting that in the current climate it was crucial to educate customers about the benefits of insurance.

He said: “We don’t want people to be underinsured because they’re trying to cut costs and mistakenly believe their policy won’t pay anyway.”

What is covered?

Imogen Sporle, director of term finance at Finanze, said skepticism about protection products is common among clients, but suggested it is not claims data that helps overcome this opposition.

She explained: “Instead of using facts and figures about how much an insurer has paid, I think it’s more beneficial to focus on the number of illnesses and circumstances they pay for. This gives clients the confidence that they don’t need to have a super-specific terminal illness for life insurance to pay.”

Protection has always had to be “sold,” according to Jane King, equity and mortgage release adviser at Ash-Ridge Private Finance, who argued it can be difficult to change clients’ attitudes that “it’s never going to happen to me.” “. .

She added: “It amazes me that people are happy to spend money insuring their mobile phone but not particularly interested in securing their income.”

King also noted that he has always used provider statistics to show that if the customer correctly discloses all relevant information, there is no reason why a claim will not be paid.

“TThe difficulty is persuading people that protection is a benefit worth having.”

justifying saying no

Scott Taylor-Barr, a financial advisor at Carl Summers Financial Services, suggested that too often apparent skepticism about payments is simply an excuse for clients to justify the risk of not protecting their family and home.

He pointed out that insurers have published claims data for years, but customers simply choose not to believe it, adding: “Having the claims figures published by more independent bodies, such as the ABI and FCA, would probably help give the figures in the eyes of a cynical public.”

Lewis Shaw, founder of Shaw Financial Services, said the claims statistics were helpful in countering customer suggestions that policies don’t pay “which we all know is nonsense.”

However, he stressed that it ultimately depends on the emotions of the customer whether to opt for a protection policy.

He added: “In general, the only people who say life insurance doesn’t pay are the ones who want a way to say ‘I don’t want to pay for it because I don’t think I need it. , but I don’t have a compelling enough reason to say no.

Highlighting Additional Benefits

Barr noted that what claims statistics rarely highlight is the fact that policies often come with a host of additional non-financial support services, such as counseling and bereavement services, free legal help and even CV writing.

He continued: “The level of help and assistance that a good insurance plan can provide at a time when you need it most is greatly underestimated.”

Lipnicki added that in the past, too many protection policies have been bought on price alone, with that “race to the bottom” meaning clients may not have received the protection they needed.

“The plans available now are better and more innovative than ever. The value, rather than the monthly price alone, is where good advice should sit,” he concluded.

Everyone can afford protection

Some brokers may have come across clients who point to the cost of living situation as a reason why they cannot purchase a protection policy.

However, this idea was dismissed little by Shaw, who suggested that if a client cannot afford to pay £40 to £80 a month for a protection policy, then “in my opinion, they cannot afford the mortgage”.

He continued, “After all, most can afford takeout, a TV package, some new trainers, etc. It’s all about prioritizing the right things over the wrong things.”

King agreed with this point, adding: “I think there’s also a myth that it’s expensive when, for many, the price of a couple of takeout meals a month would go a long way toward providing some financial protection in case of long-term illness.”

Are attitudes towards protection changing?

Sporle suggested that attitudes toward protection have actually improved since the pandemic, with a growing number seeing the impact on their finances of being too sick to work.

He added: “Although the cost of living has increased, I still find that customers are now more happy to put their profits towards this safety net.”

Brandon-Cross agreed that the pandemic had helped “embed the message” that it’s important to plan ahead for the unexpected.

We may not want to talk about it, but data on successful claims helps advisers show why a conversation is worth having,” he added.

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