“A lot of advisers may not think to revisit these cases. Two years later his cancer returned to his other testicle and he underwent orchiectomy and was paid £91,000, which cleared his mortgage.”
2) Consider family income benefit instead of term assurance
For clients who are looking to provide financial security for their family but are put off by the cost of a big lump sum, one option could be to use family income benefit instead.
Instead of the lump-sum pay out, these little used plans offer a tax-free payment every month for the remaining life of the policy.
Benefits of these plans include the fact they remove the need to make a decision of how to use and invest a big lump sum payment, although this may be less of a problem for people with a good financial adviser.
Cover is less expensive because payments stop at the end of the term of the policy, so if the client dies 21 years into a policy taken out over 25 years, any payments would be made for four years. However, in twenty one years’ time, the family may not need anywhere near the original level of cover.
3) Consider short-term income protection (or ASU)
Long-term income protection is a great product and I’m often the first to sing its praises.
However, if the cost of a full income protection policy is too high for clients, one way of bringing the cost down to a more manageable level would be to opt for a short-term income protection policy or an accident, sickness or unemployment policy (ASU).
A full income protection plan will cover a set percentage of the insured’s income until they are well enough to return to work, or through to retirement if they never recover enough. A short-term policy will limit the payout to a set timeframe, typically 12 months, or potentially up to five years.
Ian Sawyer, managing director of Assured Futures, agrees: “ASU or short-term income protection policies are great products that can be tailored to fit a client’s needs.
"It is important that clients seek advice when considering the best cover as an adviser can look at key features of their lifestyle that insurers consider when returning a quote. We would always recommend that a client buys as much protection as their budget will allow.”
Mr Lakey adds: “You could consider short-term accident, sickness or unemployment rather than full IP as statistics show the vast majority of people are back at work inside five years.”
4) Keep on top of the PMI and cash plan markets
As with life cover, IP and critical illness, reviewing personal medical insurance (PMI) for existing clients can lead to big savings if clients have been on the same policy for a number of years.
