Protection has always been the poorer sister of the financial services sector, but it seems at least that efforts by certain financial adviser firms to put it firmly on the agenda has moved sales of these products further up the list for clients.
According to the latest Swiss Re Term & Health Watch 2018, sales of new protection policies – whole of life, critical illness (CI) and income protection (IP) – were up by 11.6 per cent in 2017, on 2016. This equates to a figure of 1.97m, with all CI showing an increase of 21 per cent.
A large part of this is due to financial advisers being more aware of protection policies being an important part of the financial planning agenda, with directly authorised (DA) term sales increasing by 18.3 per cent, while DA CIsales increasing by 13.7 per cent.
Indeed, such is the extent to which some adviser firms see the importance of protection in the financial planning process, that some have actually written it into their compliance procedure. Openwork, for example, has for 18 months insisted as part of their advisers' pattern of work that they have to have a conversation with their client over protection; if he or she decides against it, they have to sign a form saying, 'I do not want to take out a protection policy'.
Openwork is the first firm to be setting up this system with iPipeline, and another network is in the process of doing so.
Ron Wheatcroft, technical manager of Swiss Re, said: "Intermediaries are doing a very good job of getting the message out. It doesn't feel there has been a mass re-broking exercise. It feels intermediaries are looking to build long-term relationships with clients. Protection is part of the conversation with intermediaries – it's part of compliance."
A key part of the adviser package is being able to offer a multi-benefits solution, which is much more available through technology – this means several different policies with different terms, multiple lives with discounts on fees and one application process.
During 2017, according to Swiss Re, the top benefit combinations were as follows:
- Two level life benefits.
- Level life with decreasing life.
- Level life with level CI.
- IP with decreasing CI.
- Two IP benefits with decreasing CI.
The above account for 35 per cent of total multi-benefit policies, with family income remaining a very popular choice as part of a multi-benefit policy. More than half – 54 per cent – of family income policies were written as multi-benefit package followed by decreasing life at 31 per cent and IP at 30 per cent.
The report said: "Utilising the ability to quote multi-benefit, advisers are now able to model different product options and create richer protection plans tailored to consumer needs.
"For example, using multi-benefit plans, two lives can be covered, with IP as a rider, and mixes of benefits spanning different terms.
"In 65 per cent of policies containing both level and decreasing life cover, the different benefits had different terms. A large amount of these multi-benefit policies were mortgage related, with 60 per cent of plans written containing a decreasing life or CI benefit."
One reason multi-benefit policies have become more popular is because of new functionality on the iPipeline platform, allowing them to offer a more tailored package.
