“There is an opportunity to be taken here,” says David Vanek, co-founder and chief executive of Anorak, an automated life insurance and protection platform. “The Coronavirus Jobs Retention Scheme is a type of IP. Now people have an idea of what would happen if their income stopped, it is no longer an intangible scenario you try and get a client to buy in to.”
For customers put off by the cost of protection, it is important to point out that health factors will also impact their likelihood of accessing it. After the fact, or after diagnoses, is the wrong time to take out a policy, though traditionally people do not think of it until then.
“It is important to put cover in place before you are diagnosed with any kind of serious or significant health condition that could further increase your premiums," says Rod Jones, head of partnerships at ActiveQuote.
"Protection insurance of any kind for someone 10 years younger than you who is already showing signs of poor health could well be more expensive than someone taking out a similar policy who is a decade older, but who is presenting very few health risks in the insurer’s eyes."
Suspicious minds
Customers are often suspicious that insurance companies will happily take their premiums during the good years, but then chisel out of meeting claims when a misfortune occurs.
This is a myth that advisers need to address when discussing protection insurance with clients. In April, Legal & General announced that it paid out a record 43 personal protection claims every day in the UK in 2020, worth a total of more than £763m, for example.
Royal London, too, said it paid a record £591m in protection claims and Aviva announced 98.2 per cent of all claims were paid, and more than £1bn went to their individual protection customers last year.
Quilter's Nixon says this lack of trust from the public is inherent in the world of protection: “Despite industry averages showing that the vast majority of protection policies pay out when claimed, many people, regardless of their experience, still feel that getting a payout might be difficult.”
Georgie Lee is a freelance journalist
