The general consensus among the advisers at the recent BestAdvice/Royal London protection roundtable was that while protection products have more features than ever before, advisers should focus on what the client actually needs.
One reason the panel believed that protection products are a lot better today than they were in the past is that they apply to more individuals and their particular circumstances.
Owrang Rahmani, director & adviser at Credius Wealth, said he believed the main improvements have been in critical illness products.
“They are superior products to those which were available in five or so years ago – additional covers for cancers, part payments, children’s cover, for example.”
Sebastian Riemann, financial consultant at Libra Financial Planning, sounded a warning, however: “Providers are trying to differentiate themselves, which is a good thing, but it can be tough on the adviser knowing what is best for the client,” he said.
Rahmani noted that while core products were fine, he was not convinced by what some protection providers were offering as extras.
“The products are better in terms of the number of things that they pay out on, great. But frills? Add ons? Amazon Prime? I’m not really that bothered about those. I prefer to keep the conversation about the product and what the product does.”
Pardeep Tiwana, mortgage and protection adviser at Temple Walbrook Financial Services, questioned whether the issue with adds-one was with advisers not understanding them or not being able to explain them with the client.
“I’ve come across a lot of clients who like the Vitality proposition, they’ve seen the adverts on television. A lot of people are pretty switched on to it and they quite like it: ‘Oh, I could do my 10,000 steps and I get an Apple Watch.’ They may be the frilly bits on the side, but that’s what catches them.”
However, Rahmani believes that having a number of features with a product can over-complicate the issue.
“You’ve got to steer the conversation in the direction that you want it to go in, which is around ensuring that incomes and homes and families are protected,” he explained.
“All of that other stuff is nice to have, but I don’t want them to detract from the concept of risk. ‘Would you want to take the risk of losing your home? Do you want to mitigate it or do you want to eliminate it altogether? What do you want to do?’”
He mentioned that his network – Quilter (formerly known as Intrinsic) – recently added AIG to its panel and that he was interested in its whole of life product.
“It doesn’t have any underwriting at all, there is a price based on your age. You’ve got to say no to a few questions, and as long as that’s the case, then you get it.
So that’s quite clever; that kind of innovation is useful,” he said.
OVERCOMING CONFUSION
Jennifer Gilchrist, protection specialist at Royal London, told the panel that the insurer had recently conducted a piece of research on critical illness, but that the participants’ definition of critical illness was actually income protection.
“They wanted something to make sure that you had income on a monthly basis in case they couldn’t work.”
Rahmani concurred, saying that clients often don’t understand the difference between income protection and critical illness cover, especially if it’s critical illness that pays as an income. This just highlighted the importance of face-to-face meetings in order to thoroughly explain the differences in the products and all the options available.
Gilchrist added that Royal London’s research found that consumers like the idea of a lump sum as opposed to an income. But having spoken to a number of people who have received money from insurance products, they don’t always use it to pay off the mortgage, which one might expect them to do.
“A woman we spoke to, she’d had cancer,” she explained. “She didn’t want to pay her mortgage off, she didn’t want her family to not have something in the bank to fall back on. And this was five years after the claim was paid, it was still sitting in the bank, she was fine and back at work.”
The panelists agreed that the simpler the process for the adviser, the better for all concerned. This was why they liked the Menu approach from Royal London. Rahmani said: “We love Menu; for most clients, that sort of product is the best it’s all in one place – one policy document. One Key Features, one Trust document.”
He added that there was some frustration with certain providers’ implementation of a menu-type approach. For example, he said that some insurers still required separate direct debits even from a menu.
“We have several clients where we’ve got very complicated protection arrangements because we’ve built on existing provisions. They’re always asking questions such as ‘Remind me again, what’s that £17.99 a month for? And what’s that thing?’ That tests your knowledge of your client’s policy details, which can be embarrassing. It forces you to be diligent.”
“We need documents that the layman can read, because I’m an adviser and I can’t read them.”
Riemann compared the process to one when sourcing mortgages, where an adviser would first look at what the existing providers can offer and then looking at a whole the market.
“When I put the protection advice together, it involves checking their menu plans with the provider directly and then seeing what else is in the market. You can give the clients the choice; nine out of 10 times you’ll probably end up there anyway. But it’s doing that research to start with. Those complications contribute to the gap in the protection market,” he said.
It is unlikely to surprise advisers that a common gripe with the panellists was documentation.
“There needs to be an improvement in how well they are presented,” Rahmani said.
“Quotes could be presented better, some of them are awful! When you read a quote from a provider, you find yourself asking, ‘where’s the premium? Which bit relates to which? Hold on, the waivers over here. Why is it there?’
“We need documents that the layman can read, because I’m an adviser and I can’t read them.”
He also argued that Key Facts documents were often too long and that they should be two pages maximum.
“There’s an awful lot of simplification that could occur in the articulation of the value that these policies have, because I think they are brilliant policies. I just don’t think it’s that easy to articulate.”
PROVIDER SUPPORT
According to the panel, the relationship with a business development manager (BDM) can make all the difference when it comes to understanding the products and their add-ons, and helping with live cases. Rahmani said: “With Royal London and Aviva, we work very closely with the BDM, but less so nowadays with Aviva – and unsurprisingly, we don’t recommend their products that much any more. I wonder why that is; because we don’t understand the products as well.
“Having someone that we can call and say, ‘we’ve got this case, what do you think?’ is crucial.”
A common complaint was with the medical profession; specifically, the time it can take to get a General Practitioner’s Report (GPR).
Tiwani suggested that it would be beneficial to advisers and their clients if the providers could some how put pressure on doctors’ surgeries to issue GPRs in a timely fashion. He revealed that he recently had to wait three months for a report.
He said: “In the end, I finally managed to get through to the practice manager and told them that my client was desperate for the cover. I added: ‘What are you going to do if she dies? Are you guys going to give her the money?’ And then suddenly they started moving to get the report sorted out.”
Gilchrist revealed that the insurance industry was attempting to work with GPs to try and increase medics’ use of electronic requests and other technological services. Whilst it would initially take them more time because they needed to learn how to use the new systems, the industry view is that in the long term, the time savings for over- stretched surgeries would further improve adoption rates.
She added: “Royal London has a data analytics team who sit behind all this medical data and it’s one of the areas that we feel is going to be important in the future.
“What they are really trying to understand is whether every piece of information we get in actually relevant and if we use it? If the customer has given you sufficient information, when you get the GP report, has it actually added any value?
“It’s about putting the trust in the customer and the information and to start thinking about how to do things in a more effective way. It could be that the best way to get information might not always end in a medical or a GP report. We all will see things change as that data analytics model continues and gets more progressive. This is a new idea, we’re learning as we go.”