It might sound obvious, but one way of reducing the amount a client pays on a monthly basis is to ensure they are not paying for cover they do not need.
The amount of cover needed will vary from client to client, depending on a wide range of circumstances, including what the cover is intended to do, earnings, the age of dependants, the amount outstanding on a mortgage, as well as many other factors.
Many employers offer death-in-service cover as part of their usual workplace benefits, and this is typically four times annual salary. Any death-in-service benefits should be taken into account when calculating how much cover is needed and the amount paid for by the client can be reduced accordingly.
Another factor that advisers need to be aware of is whether the amount of cover on existing decreasing term assurance linked to a mortgage is still accurate.
Most insurers use a rate of interest of 10 per cent when estimating the rate of a client’s mortgage repayment.
With the interest rates on mortgages at all-time lows, as low as 1 per cent for some borrowers, the amount of cover provided by the policy can often fall at a slower rate than the mortgage it is due to cover. Mr Lakey says this should be taken into account when reviewing these policies.
“Recently, I reviewed the cover of a client and the insurance policy was using a value of £107,000. I checked with the client and due to the low interest rates in recent years, they had paid off their mortgage at a much quicker rate than the estimate and the outstanding value of the loan was only £99,900.
“I managed to save the client 10 per cent on their premiums, which I would have missed if I hadn’t checked with them.”
8) Cut out all the extras
If there’s one thing the protection industry is good at its adding extra options and making things more complicated.
On the plus side, though, if all the products were really simple and all exactly the same, then most people wouldn’t need an adviser.
However, cutting out the add-on options that aren’t relevant could save money when faced with a budget. Options such as waiver of premium and indexation are often wise purchases, but also ones that can be avoided or added later if needs be.
9) Find out if your clients have given up smoking
Being aware of clients that smoke so that you can contact them every few years, for example, to find out if they’ve given up, can be a wise move.
