Stephen Crosbie, protection director at Aegon UK, explained that, “while unemployment is low, inflation continues to track higher than average salary increases, meaning many are undoubtedly feeling the pinch”.
“Conventional wisdom would suggest that in times like these sales of protection take a downturn, but it could be this very uncertainty that’s making consumers more mindful about guarding against worst-case scenarios,” Crosbie said.
The Exchange, an online comparison and quote portal, reported a 5% increase in life insurance applications between May 2016 and May 2017.
Additionally, searches for life insurance on Google rose 9.4% over the year to June 2017 and Swiss Re’s Term and Health Watch 2017 reported that the number of new term life-only policies increased year-on-year by 7.1% in 2016.
“So, with interest in insurance at such a level, this presents a key opportunity for [advisers] to be discussing this with clients,” Crosbie said.
IFA domination
While advised sales still dominate the protection market, there has been a rise of 22% in direct to consumer sales, compared with 3% in the IFA sector.
“But when it comes to larger liabilities, consumers still look for the reassurance of expert advice,” Crosbie added.
He explained that advisers are most likely to demonstrate their value in what he called “non-standard” markets.
These include people with chronic conditions who can find themselves priced out of the market and older clients who may need more inventive protection solutions to keep the cost affordable.
“Equally, integrating life, critical illness, and income protection insurance so it’s collectively affordable and comprehensive, making sure it covers all of a consumer’s financial liabilities and integrates with any other cover that an individual receives from other sources such as their employer, still demands professional know-how,” Crosbie said.
Adequate cover
The biggest value advisers can offer, Crosbie said, is working with clients to make sure the level of cover is adequate.
Earlier this year, Aegon found that the average mortgage debt outstrips the average life insurance pay-out by around £45,000.
“An adviser who’s on hand not only to arrange cover initially but to make sure that it stays up-to-date by virtue of having a comprehensive understanding of a client’s circumstances – that’s a value well worth promoting” Crosbie said.
