Protection Insight - Issue 3


INSIDE THIS ISSUE: AVIVA Nothing will happen How housing wealth can help a generation saddled with debt ROYAL LONDON Mapping your recommendations to your clients’ needs VITALITY Protection – Are you looking past the price? Plus much more... to me, right? MORE2LIFE


PROTECTION INSIGHT Welcome to the latest edition of Protection Insight, our dedicated supplement showcasing the latest developments and products in the protection market from key providers. With the financial year coming to an end you may be starting to plan ahead to map out your CPD requirements for the next year. Tenet’s Adviser Development Programme offers you a well-structured programme of events, which includes focus on the protection market. In September we have our NEW Mortgage & Protection Business Focus Event, which includes an afternoon of Mortgage and Protection sessions hosted by our provider and lender partners, and in October we begin the non-investment roadshows, which will cover Mortgages, General Insurance and Protection. The events combine stand up formal presentations and interactive round tables and together carry around 3 hours unstructured IDD CPD, so would put you well on your way for collecting the all-important 15 hours IDD CPD required for the year. For more information on our adviser development programme and a schedule of CPD events available to you please go to https://events. The Insurance Distribution Directive (IDD) requires you to obtain specific information about your clients’ insurance demands and needs and to map these to products on offer. This means you have to carry out a robust analysis of what’s available so you can be confident your recommendation is in line with your client’s requirements. On page 4 Royal London talk about the customer demands and needs requirement and key points to consider when making a protection recommendation. Aviva highlight the importance of making the claims journey faster stating “We measure success in a variety of ways but helping our customers by settling their claims quickly and easily is what matters the most to us.” Read more about the success Aviva had in 2018 on page 7. More2Life’s article “How housing wealth can help with a generation saddled with debt” highlight’s the fact that while a growing number of older people are carrying secured and unsecured debt into their retirement as part of a deliberate asset management strategy, more are doing so to simply make ends meet. Read the full article on page 8. On page 11 Zurich highlight the rise of interactive underwriting and how it can boost client relationships. The benefits of interactive underwriting are plentiful allowing smarter questioning for clients, swifter decisions from insurers which in turn can avoid some cases being referred to an underwriter. Read the full article for the full benefits. Vitality’s article “Protection – Are you looking past the price?” takes a look at where the real added value can be found when buying protection. The devil really is in the detail you need to make sure that, as far as possible, your clients fully understand what they’re buying. After all, just because two policies cover the same condition, doesn’t mean they’ll pay out at the same time. Read the full article on page 12. We hope you find this supplement an informative read, widening your knowledge and keeping you up to date with the protection market. ALSO IN THIS EDITION




The Insurance Distribution Directive (IDD) requires you to obtain specific information about your clients’ insurance demands and needs and to map these to products on offer. This means you have to carry out a robust analysis of what’s available so you can be confident your recommendation is in line with your clients’ requirements. I wrote previously about the requirements introduced by the IDD. Here I’ll talk more about the customer demands and needs requirement and key points to consider when making a protection recommendation. Tailoring a protection plan At Royal London, we understand that all your clients are unique. You need protection solutions that are flexible and aren’t ‘one size fits all.’ When carrying out your product research and determining a shortlist, you’ll want to make sure the product options available give your clients choice. Let’s start with risk. The biggest risk your clients face during their working life is being off work due to illness or injury. Using the risk summary report from our marketing studio, I established that I have a 23% chance of being off work for two months or more in my working life, yet only an 11% chance of getting a critical illness, and a thankfully much smaller 3% chance of dying 1 . But life cover and critical illness sales outstrip income protection by some margin. Of course income protection might not be appropriate for every client, but running this simple report is a great way to encourage them to think about their needs. If they’ve just taken out a big mortgage, the natural instinct is to protect that large debt in case they die. But what if they couldn’t work? How would they pay their mortgage and other outgoings each month? That’s where income protection can help, though you’ll need to factor in employer sick pay arrangements and any other benefits they might be entitled to. Mapping your recommendations to your clients’ needs


But what if they couldn’t work? How would they pay their mortgage and other outgoings each month? Affordability could be an issue here - it’s true income protection can be more expensive than other covers. But many providers have enhanced their income protection plans to make them more flexible and affordable. For example, we recently introduced a five year payment period, meaning clients can choose from three short- term payment periods (we also offer one year and two years), which brings the cost down significantly compared to full term. And while income protection is primarily designed to pay out a regular income if your client can’t work through illness or injury, some plans also include fracture cover and other benefits. Certain providers (including Royal London) offer this at no additional cost and include it in their plans automatically while others offer the benefit as an add-on with an additional monthly premium applied. Broken bones could mean weeks off work, so fracture cover can be a valuable addition. We also include hospitalisation benefit as standard with our Income Protection. Considering more than price Once you’ve established different options, it’s time to look beyond price and consider the product benefits in more detail. But with so many products available this can be time- consuming. Fortunately, there are tools to help, such as CI Expert, which lets you compare critical illness plans based on the statistical likelihood of making a claim. After all, that’s the most important thing when it comes to critical illness cover and why we focus on having some of the best cover for the critical illnesses your clients are most likely to claim on.

recommending critical illness cover to them it’s worth considering plans that offer the ability to add children’s cover at a later date. Our own Critical Illness Cover offers three options: no Children’s Critical Illness Cover, Standard Children’s Critical Illness Cover and Enhanced Children’s Critical Illness Cover. Your clients can add this at any time without giving us any medical information. What suits your client today might not be what they need in the future, so make sure any plan you recommend is flexible enough to adapt with them. You might also want to consider features such as lifestyle reviews (which offer the opportunity to reduce premiums if your client changes their lifestyle e.g. giving up smoking) and cover increase options (which allow your client to increase their cover without medical evidence at certain life events e.g. getting married). The customer demands and needs requirements of the IDD is ultimately about making sure the products your clients take out are consistent with their unique demands and needs. So when you’re recommending a protection plan, make sure you consider the various product benefits and options on offer, as well as the price.

F&TRC’s Quality Analyser is another comparison tool which covers life protection, mortgage protection, income protection and family income benefit. Our Business Support Unit can help you navigate these systems to make sure they work to your business model, so you can achieve the best results for your clients. Looking after your clients’ wellbeing Another area to consider is value- added services. Many providers include these within their plans automatically, as we do with our Helping Hand service. This offers tailored practical and emotional support to customers and their families (partner and children) during difficult times. If you recommend any advised Royal London protection plan, your clients get access to a dedicated nurse who can provide support, as well as access to specialist services to help with bereavement and illnesses such as cancer. So even if your client only takes out Life Cover with us, they still get the support of a dedicated nurse if they need it. Our customers often tell us this service is more valuable to them than any financial payout. And it’s available from the day the plan starts, not just at claim. How many of your clients would see the benefit of having this sort of service available with their protection plan? What suits your client today might not be what they need in the future, so make sure any plan you recommend is flexible enough to adapt with them. Adaptable cover Plan flexibility is something else to consider. While that young couple who’ve just bought their first house might not need children’s critical illness cover right now, in the near future they might be thinking about having a family. So if you’re

Ross Jackson Senior Protection Marketing Manager

To find out more about our protection products please visit

1 Royal London Risk Summary Report. Based on a non-smoking male aged 44 next birthday with a retirement age of 65.


Nothing will happen to me, right?

Paying claims is the single most important thing we do. It’s how we help our customers defy uncertainty by providing financial support when they need it most. Because as little as we like to admit it, the fact is that illness and death can hit families at any time. Of course, there are things we can all do to reduce the risks of illness and live a long healthy life but it’s not all within our control. In fact, the only thing we can control is making sure that should the worst happen, your customer and their families are financially protected, so that money is one less thing to worry about. 2018 was a great year Last year, we paid out more than £957 million worth of claims to more than 26,000 customers and their families in the UK. We paid more than 16,000 customers for

Building trust People’s perception is that insurers don’t pay out on claims – that we’re quick to take money, but no so quick to pay out. Yet, last year we paid out 96.5% of the individual protection claims we received. We’re happy we’ve been there for our customers in 2018, by supporting and helping them making the claims journey as smooth as possible. For more customer stories and more information on our covers and support services please visit www.aviva- protection claims page. *These services are non-contractual and can be removed at any time.

life and terminal illness claims and we saw an increase in children’s benefits claims too, settling 264 claims to under 18’s. When it comes to paying out claims, we don’t see it just from a statistical point view. We believe that it’s all about the individual claims journey each customer experiences – and that journey comes with empathy and consideration considering what’s going on in our customer’s life. We measure success in a variety of ways but helping our customers by settling their claims quickly and easily is what matters the most to us. Making claims journey faster To make claiming as quick, easy and stress- free as possible, we process some life insurance claims over the phone. In these situations, when compared to paper-based claims, we’ve seen a reduction in the average time it takes to settle the claim from around 28 days down to just two or three. We’ve also launched two new support services* to help customers’ bereaved families: • ‘Practical Guide to Bereavement’, sent to the families of customers who contact us about a life insurance claim. • Signposting to legal services through a third-party digital toolkit to help deal with a loved one’s estate.

Mark Cracknell Head of Protection Sales


How housing wealth can help a generation saddled with debt

The role of the financial services industry in helping over 55s achieve financial security and stability has never been greater than it is today. For the third year in a row, we have commissioned research from the Centre for Economics and Business Research (Cebr), and the results paint a clear picture of rising debt levels and lower income streams among retirees. This combination of factors means many are facing difficult ongoing decisions about how to manage their income, assets and outgoings during retirement; a period of time that is now longer than ever before. It is here that the later life lending sector specifically can play a vital role. As over 55s look for financial solutions to combat shortfalls in pension provisions, pay off debt and manage the escalating cost of everyday living, now is the time to highlight the continued possibilities of housing wealth in helping to meet these challenges faced.

still have a mortgage on their property, with 68% of these individuals having a repayment mortgage and 23% worryingly an interest-only mortgage. The industry needs to work collectively to break down the perceived barriers and develop products that are attractive, flexible and meet the needs of an increasingly diverse population. It needs to promote the message that wealth- based housing products can provide the financial stability that many older people are in desperate need of. The retirement landscape is changing; people are spending longer in retirement than ever before and the later life lending industry must ensure it does all it can to offer products that meet the changing financial needs and circumstances of today’s retirees.

This research has found that not only are many people facing significant financial challenges in retirement, but forecasts suggest that by 2029 the total value of debt for people aged 55+ will reach £548 billion. While a growing number of older people are carrying secured and unsecured debt into their retirement as part of a deliberate asset management strategy, more are doing so to simply make ends meet. The report shows that income levels are continuing to fall with age, with many 65-74 year olds estimated to have just £3,100 left at end of the year to save, invest, or use for future spending. This is the second lowest amount of income left after expenditure of all age groups, after the under 30s age group, and adds credence to the belief held by almost half of over 55s (48%) that they do not have enough savings to cover an unexpected £5,000 bill. A number of factors are driving these rising debt levels. As first-time buyers are getting on the property ladder later and house prices have significantly increased over the past 15 years, mortgage debt has also risen. This has resulted in not only higher mortgage values that borrowers are spreading over a longer period, but people carrying mortgage debt beyond traditional retirement age. The Cebr research also reveals that 14% of households over the age of 55

Dave Harris Chief Executive Officer


Graham Taylor LV= National Account Manager

Financial resilience and the art of selling

A lot of progress has been made professionalising the advice sector with qualifications, examinations and CPD. But we know that people don’t buy based on facts and logic, they buy through emotion – too often we forget that. Selling is an integral ingredient to financial planning, and an absolute essential when it comes to protection and the financial resilience of your clients. That’s why at LV= we concentrate on supporting advisers in drawing out the importance of income – introducing, framing and talking protection. Take our Risk Reality Calculator as an example. It’s great for starting conversations about protection without talking products. It triggers our innate human curiosity – everyone wants to know what their results will be.

Our most valuable asset Ultimately our aim is to help more families be financially resilient, but our experience, and that of the advisers we speak to, tells us that clients often struggle to see the value of a regular income over a single lump-sum payment. It’s one of the reasons why term and critical illness advised sales outstrip income protection by a ratio of around eight to one. So if you’re looking to help the client remember what their most valuable asset is, why not remind them that they probably insure their household appliances like a TV, definitely insure their car and their house, but for some reason they often don’t insure their most important and valuable asset – themselves and their (ability to earn) an income. Adding value We’re also seeing advisers use added value services to highlight the wider emotional, family, health and practical support services for life’s little bumps in the road.

Mobile-based access to GPs, second opinion services, physio and counselling services are providing instant access to experts, and are far more relatable for clients than the big life shocks (that no-one wants to think about anyway). They are also proving an easier way to introduce the idea and a more tangible value of protection. Selling is our business This brings me back to the beginning. Sales skills are imperative in us fulfilling our mutual ‘duty of care’ and principle of ‘acting in the best interests of our customers’. And we shouldn’t be afraid to sell, but should sell the need not the product. The vast majority of people don’t wake up with a stonking urge to rush out and buy some protection, but we really should remind them of their most valuable asset, and that it needs to be protected.

If you want to find out more about LV= protection range, contact your LV= Account Manager, call us on 0800 032 4219 or visit


THE RISE OF INTERACTIVE UNDERWRITING (and how it can boost client relationships)

The benefits of interactive over fixed underwriting – for advisers and clients – are plentiful, writes Scott Sinclair… The rise of interactive underwriting Interactive underwriting – unlike fixed underwriting – involves smarter questioning so your clients are only asked relevant questions. It allows insurers to make swift decisions in many more cases and helps to avoid some cases being referred to an underwriter. Interactive underwriting, as well as straight- through processing and point-of-sale decisions, are not new developments in protection. But the frequency with which interactive is used has grown rapidly. Only 10% of business written with Zurich through financial advisers in 2018 used the fixed route, and this pattern has continued into this year. Benefits of interactive The benefits of interactive underwriting are three-fold: there is an upside for the adviser, for the client, and for the insurance company.

used a laptop in front of a client and don’t intend to begin now. These are all legitimate reasons, and it is unlikely that 100% of applications will be made via interactive underwriting, at least for the next few years. But its rise, and popularity, continues to grow with advisers. To find out more, contact your Zurich consultant on 08085 546 546 or visit

From an adviser’s perspective, most insurers offer higher commission on policies written via interactive. This is for a simple reason: it involves less work for the underwriters so more policies can be placed on risk overall. There is another, less feted reason why interactive can benefit advisers: it can be impressive to a client to be insured so quickly, and can help strengthen a relationship. Similarly for the client, a point-of-sale decision means no delay, fewer underwriting questions, and they can enjoy the peace of mind protection offers almost immediately. Interactive underwriting is flexible too. There are a number of ways to collect data from a client and pursue the interactive route. Some advisers sit with clients to begin the online application, while others capture clients’ answers to enter into the interactive system later. A call centre model is also likely to use interactive underwriting. And some insurers, including Zurich, offer a ‘delegated’ underwriting option, allowing the client to complete the interactive questions at their own leisure. Popularity of interactive underwriting Of course, for some advisers, the fixed route remains the preferred option, usually for reasons to do with client preference or advice model. Some advisers have never

Zurich may record or monitor calls to improve our service

Zurich Assurance Ltd. Registered in England and Wales under company number 02456671. Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX.

Scott Sinclair Zurich Content Manager, Marketing


PROTECTION – are you looking past the price?

Buying protection insurance shouldn’t just be about cost. We look at where the real added value can be found. Due to the inherent complexity of protection products, it can often be difficult to compare two products directly. The temptation, therefore, is to select the cheaper option. However, as the saying goes, ‘caveat emptor’, or ‘buyer beware’. Because there’s likely to be a reason why one is cheaper than the other, due to an absence of value. Of the 20 or so providers in the protection space who offer critical illness cover, it’s true that most cover a similar number of conditions, with both full and partial payout conditions, and categorise conditions under “ABI+”. But despite all this, two plans covering similar conditions may still have a wide variation in the level of cover they provide. So it’s important to really understand the differences in the cover you’re recommending and the implications these can have on clients. The devil is in the detail Similarly, you need to make sure that, as far as possible, your clients fully understand what they’re buying. After all, just because two policies cover the same condition, doesn’t mean they’ll pay out at the same time, for example. Take prostate cancer: many protection providers cover it at a low grade. However, most will only pay out on surgical removal of the prostate or where there has been some other form of treatment. Now, the recommended treatment for low grade prostate cancer, according to the NICE guidelines, is in fact to adopt active surveillance. So removal of the prostate is unlikely to be recommended by doctors at this stage of the disease, hence no chance of a payout – in some cases for years, in other cases ever – from their Critical Illness policy. Angioplasty is another typical example of where the devil is in the detail. Most

Critical Illness providers will only pay out when two or more arteries or the left main stem artery of the heart have been operated on. But when you take into account that over 80% of angioplasties are only operated on one artery, many people are left disappointed and empty-handed as soon as they try to claim. It’s a similar story with heart attacks. Most insurers insist on a characteristic rise in troponins as well as electrocardiographic changes, another form of proof required for a successful claim, which for a lot of people can be a difficult threshold to reach. The net result of all this can be that advisers progressively face a growing sense of cynicism from their clients, in cases where their policy doesn’t pay out as expected. Not all cover is the same But there are signs that some providers are starting to do more for clients. Vitality is one of a handful of providers in the market to cover low grade prostate cancer, with no requirement for treatment. This is in line with customer expectations, where three quarters expect to be covered for low grade prostate cancer regardless of required treatment 1 . Paying out at early stages of illness not only helps to ensure expectations are better met, it gives vital peace of mind to both clients and advisers. In the case of Vitality Comprehensive Serious Illness Cover, it makes an initial payment for an angioplasty no matter how many vessels or which ones are operated on, with an increased payment once two or more or the left main stems are operated on. Again this is in line with customer expectations with 8 in 10 people expecting a payout for angioplasty on one artery 1 . Vitality will also pay out on diagnosis of a heart attack, with no requirement for proof via electrocardiographic changes. What’s more, Vitality are the only major provider to do this. Earlier payments Unlike most policies, which are designed to provide cover for a one-off payment or a high degree of severity – meaning many people having to suffer for prolonged periods without any financial assistance

– Vitality’s Serious Illness Cover takes a severity-based approach, as well as covering more conditions at earlier stages. This means that payouts are according to the impact an illness has, which is better aligned to the needs of today. After all, medical advances have improved the way illnesses are treated and surgical procedures have become less invasive, which means that conditions today are less critical than they once were. This is in line with doctor and customer expectations, with over seventy percent of customers 1 and doctors 2 seeing it as very important that payments under a critical illness policy pay out on severity. This means your clients can get access to their cover when they first face an illness, with cover continuing in the event that their illness progresses or they get another illness. A good example of this is rheumatoid arthritis. Vitality covers this on diagnosis and then increases the payment as the condition deteriorates, whereas other providers require a significant impact before making a payment. In addition, if your client wants the security of a full payout for conditions that get a full payout under a critical illness cover, they can select Serious Illness Cover Booster for an extra cost. Think wider Next time you are advising one of your clients on a protection policy, there are several elements in terms of value to consider. In particular the breadth of coverage and making sure that cover is in place for lower severity as well as higher severity illnesses are particularly important. The devil really is in the detail. Vitality prides itself on its wide range of coverage and the definitions which increase the chances of payout. 1 Independent research of 800 policyholders or prospective policyholders commissioned by Vitality in March 2018 2 Independent research of 150 doctors commissioned by Vitality in March 2018 Aug 2019. This article’s view is based on the law, practices and conditions as at the day of publication. While we have made every effort to ensure they are accurate, we accept no responsibility for our interpretation or any future changes.


Andy Philo Director of Strategic Partnerships and Employed Distribution


Protection that supports long-term client relationships

Typically, the protection conversation starts alongside a key life event – such as getting married, buying a house or having a baby. But often that’s where the conversation ends. We’ve built flexibility into our policies which means the protection conversation isn’t just a one-off. We designed our proposition with the future in mind, determined that customers should have cover they can rely on for a lifetime. We started by looking at all the things that can happen in their lives and thought of the best way to protect them in any event. Our policies can help you create long-term relationships with your clients, supporting the value of your advice. Here are a few examples: •To us, all malignant skin cancers are critical. Cancer research reported 158,007 cases of malignant skin cancer in 2015 1 . Other providers would have paid out on only some of these cases. At Guardian, we want to keep things simple, so your clients know what they’re covered for without checking the small print. So, we pay out on all of them – no ifs, no buts. Which means you’re not faced with having the ‘you’re not covered’ conversation. •If your clients are expecting a baby, you can add Children’s Critical Illness Protection. No one wants to pay for something they don’t need. Statistically, people are waiting longer to have children, these days 47% of women don’t have children by the age of 30 2 . That’s why we don’t include children’s critical illness cover automatically. Your clients can add it to either Life Protection or Critical Illness Protection anytime, and can choose any amount between £10,000 and £100,000, to a maximum of their own amount of cover. For those who are planning children, some might want to add Children’s Critical Illness

9 months before the baby is due. This way a child will be covered from birth for certain conditions. •If a client can’t work, built-in waiver means premiums don’t become a burden. Trying to upsell protection can be difficult. However, our Premium Waiver comes as standard – at no extra cost. And we don’t just waive premiums if your clients are too ill to work; we also waive them for up to 6 months after they’ve had a baby, or if they’ve been made redundant. Giving you lots of reasons to ensure your clients remain protected throughout their life, no matter their circumstance. •Dual life keeps unclaimed cover in place if a partner gets critically ill. A typical joint life critical illness policy ends after a claim. Both partners then need to take out new policies with inevitably higher premiums – and the one who claimed may not even be able to get cover. However, with our dual life approach, unclaimed cover stays in place. And depending on the circumstances, the person who claimed may even be able to buy back some critical illness cover. Source: 1 Skin cancer statistics, Cancer Research, 2015 2 Childbearing for women born in different years, England and Wales: 2017, Office for National Statistics, November 2018

Jacqui Gillies Marketing Director

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