5 TOP TIPS TO SELL MORE PROTECTION!
5 TOP PROTECTION TIPS! AGENDA • Turning water into wine! • Multi claims - limited benefit plans • Pay rise on claims • Sick pay for self employed • Marketing Protection
5 TOP TIPS FOR PROTECTION LEARNING OBJECTIVES At the end of this session, you will … • Have some ideas about how to position protection with your clients, and know how Royal London tools and marketing support can help you and your business!
TURNING WATER INTO WINE!
5 TOP PROTECTION TIPS MORTGAGE PROTECTION • Which protection product is easiest to recommend to clients? Critical Illness Critical Illness Income Income Life cover* Life Cover Cover Cover Protection Protection 537,073 1,088,457 148,498 • Ok, what type of life cover? Mortgage Mortgage Family Income Family Income Whole of Life Whole of Life Protection Protection Benefit Benefit Source – Swiss Re Health and Term Watch 2019 (The figures above are for protection sales recorded in 2018). *Life cover figure is based on term only sales .
REGULATORY RISK WARNING Your home is at risk if you do not keep up repayments on your mortgage or other loans secured on it… This is important! It’s written on every KFI or Mortgage Offer you issue to clients and it explains what ‘Mortgage Protection’ is all about 6
REGULATORY RISK WARNING Your home is at risk if you do not keep up repayments on your mortgage or other loans secured on it… My job is to help you buy your home but also keep it should the worst ever happen. Protection insurance has 2 simple objectives: keep your home and maintain your lifestyle! 7
5 TOP PROTECTION TIPS MORTGAGE PROTECTION • How do you explain the objective of Mortgage Protection and your recommendation? Let me explain how this works… “This plan covers both of you… that means if either of you die during the mortgage term, you can make a claim and pay off your mortgage ”
5 TOP PROTECTION TIPS MORTGAGE PROTECTION “Ok, so that’s the mortgage paid off… But how much money would each of you need every month to pay your other monthly bills … what would make you feel comfortable ?” Client 1 Client 2 £1,500 per £1,500 per month month
5 TOP PROTECTION TIPS MORTGAGE PROTECTION The Solution! A package of protection which is cost effective and ensures they can pay off the mortgage and also pay their other household bills should the worst happen! Joint Life Family Income Family Income Mortgage Benefit Benefit Protection £1,500pm £1,500 pm
MULTI CLAIMS LIMITED BENEFIT PLANS
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • Royal London Income Protection plan holders with a ‘full payment term’ plan will be able to make a claim • Claims are paid after the deferred period • The claim will be paid for as long as the claimant is off work sick and will stop either when the plan holder returns to work or the plan expires. • If the claimant returns to work and suffers a relapse of the same condition within 6 months, the deferred period will be waived and a new claim can be made 12
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • Let’s take a look at how this works for shorter pay - out period Income Protection plans • In this example, we will look at 5 year pay-out period plans… 13
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • Bob (30) has an Income Protection plan with Royal London • The deferred period is 13 weeks and his sum assured is £2000 per month • The payment period is 5 years and the cover term is until the end of his mortgage in 35 years time What would Bob’s experience be should he ever need to make a claim? 14
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • If Bob is unable to work due to sickness, Bob must wait his deferred period (13 weeks) before any IP benefit is paid. • Bob is suffering from a muscular skeletal condition • Because Bob has a 5 year payment IP benefit with Royal London, he has the potential to make a claim for up to 5 years 5 years Off work sick Deferred 13 weeks 15
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • Bob is off work for a total of 2 years and 3 months and he has been receiving Income Protection benefit during this time • Bob has received 2 years of Income Protection benefit • Bob recovers and returns to work 5 years 3 years Off work sick Income Protection claim recover Deferred 2 years 13 weeks 3 months 16
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • After 2 months back at work, he suffers a relapse of his musculo skeletal problem and has to go off work sick again • Bob can claim for a further 3 years if needed – a total of 5 years • And, he won’t have to wait his deferred period – instead the claim will be paid straight away 3 years Off work sick Income Protection claim recover Income Protection claim Deferred 2 years Up to 13 weeks 3 months 5 years 17
CLAIMING INCOME PROTECTION ROYAL LONDON CLAIM JOURNEY • Lets say that Bob claimed for 5 years. He then recovers from his condition and returns to work • As long as Bob has returned to work for a period of 6 months or more following his previous claim… • He could make another claim which would pay Income Protection benefit for up to 5 more years • This could be for the same condition as before, or for a new condition • The deferred period will apply 5 years Returned to work for 6 months+ New Income Protection claim Claim for up to 5 years 18
PAY RISE ON YOUR CLAIMS
FAMILY INCOME BENEFIT LEVEL OR INDEXED COVER? • When you apply for Family Income Benefit with Royal London, you can choose Level cover or Indexed cover • When you choose Indexed Cover, you can choose a rate to increase your cover each year by - 2%, %, 3%, 3%, 4%, %, 5% 5% or Ret etail ail Pri Price ces s Ind Index • Premiums for indexed cover are slightly higher than for level cover 20
FAMILY INCOME BENEFIT EXAMPLE – NOT INDEXED Monthly premium = £8.50 £10,000 Total income paid = £200,000 each year Sum assured Term in years 25 Death after 5 years Source: Royal London Personal Menu Plan, October 2019. Client aged 35 next birthday, non-smoker, 25-year term, life cover only. This premium includes a monthly plan charge of £2.60. Figures have been rounded for illustrative purposes.
INDEXATION OF FAMILY INCOME BENEFIT HOW DOES IT WORK? • Clients will be offered the option to increase cover, either RPI or fixed rate • Indexed family income benefit costs slightly more than non-indexed • We’ll stop offering the option if a client refuses the increase two years in a row Let’s look look at the t the si situ tuation tion a aga gain.. in...
FAMILY INCOME BENEFIT EXAMPLE – BENEFIT INDEXED Income in final year = £32,251 Total income paid = £422,015 Cost in year 1 = £8.90 each month (Assumes each increase is agreed as offered) Income in year of death = £12,155 £10,000 each year Sum assured Death after 5 years 25 Term in years Source: Royal London Personal Menu Plan, October 2019. Client aged 35 next birthday, non- smoker, 25-year term, life cover only. This premium includes a monthly plan charge of £2.60. Figures have been rounded for illustrative purposes.
INDEXATION OF FAMILY INCOME BENEFIT HOW DOES IT WORK? • The plan holder can choose to not take the increase to the cover when we write to them each year Let’s loo look at th t the situa situation tion a again... in...
FAMILY INCOME BENEFIT EXAMPLE – BENEFIT INDEXED Income in final year = £25,270 Total income paid = £330,660 Cost in year 1 = £8.90 each month (Assumes each increase is agreed as offered) £10,000 each year Sum assured No increases to cover taken Death after 5 years 25 Term in years Source: Royal London Personal Menu Plan, October 2019. Client aged 35 next birthday, non- smoker, 25-year term, life cover only. This premium includes a monthly plan charge of £2.60. Figures have been rounded for illustrative purposes.
SICK PAY FOR SELF EMPLOYED
Bob ob 50000 50000
Bob ob 50000 50000
MARKETING THE NEED FOR PROTECTION
5 TOP TIPS FOR PROTECTION LEARNING OBJECTIVES At the end of this session, you will … • Have some ideas about how to position protection with your clients, and know how Royal London tools and marketing support can help you and your business!
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