What if? Income Protection This is not a consumer advertisement. It is intended for professional use only and should not be relied upon by private individuals or any other persons.
Learning Objectives Understand the Income Protection market and the opportunity for advisers in this market to help their customers take protection Understand why is it essential for anybody who relies on an Income to have it protected and the ways to help a customer also understand this. Demonstrate how to bring the benefits of income protection to life and identify a clients needs through sales support tools. 1
Seven Families Campaign 2 Source: 7families.co.uk
Seven Families Campaign Their views on income protection 3 Source: 7families.co.uk
UK Labour market 32.4 million adults working full or part time in the UK 4 Source: ONS – UK Labour market as at August 2018
State of the nation 18 18 properties properties 1.70% is the £123,870, People in repossessed the average repossessed record low the UK everyday - everyday - savings mortgage owed one every one every ratio in Q1 debt per £1.576 one hr 17 household one hr 17 2017 trillion (Jan mins. mins. 2018). saving 5.5% of Average saving 5.5% of 34% of Average the average the average first-time households salary in an first-time salary in an buyer average instant are owned average instant buyer loan access savings outright, borrowed access savings estimated account for a account for a 28% were 3.63 times £140,035 year = £2.22 year = £2.22 mortgagors, their income interest after tax interest after tax UK 304 people a 20% households percentage percentage day declared households spend £3.53 of of insolvent/ are rented households a day on households bankrupt. privately with no with no One person 17% were water, savings 35% savings 35% every 4 Social electricity minutes housing and gas. 5 Source; The Money Charity, May 2018
How many people have any form of income protection insurance? 2 1 1 in 10 Less than 5% 1 in 10 3 4 Over 33% Around a quarter
Income Protection sales 121,084 120,094 117,814 107,302 96,889 90,794 1 in 10 have some form of income protection 2012 2013 2014 2015 2016 2017 7 Source: Swiss Re Term and Health Watch 2018 Source: Mintel Report 2017
Top insurance purchases What type of insurance is the most popular? 70% Contents 18% Pet 38% Travel 68% Motor 30% Life Insurance 11% Critical illness 57% Buildings 10% Income protection 8 Source: YouGov poll 2017 Source: Zurich Insurance 06/09/2017
Holistic protection advice Is it a product led conversation? A balanced comprehensive protection conversation with IPB your clients is an important step in ensuring they have the Lifestyle right cover in place to protect (STIP) their lifestyles FPIP (FIB) However….. CIC The reality is most advisers never get above CIC on the pyramid during their Term discussions 9
Holistic protection advice Is it a product led conversation? Term CIC A balanced comprehensive protection conversation with your clients is an important FPIP (FIB) step in ensuring they have the right cover in place to protect their lifestyles Lifestyle (STIP) IPB 10
INCOME protection I I don’t need to protect my income N Not going to happen to me What reasons do customers give for NOT protecting their income? C Can I take it away to consider O Off work – never going to happen M My savings will support me E Employer will look after me 11
Consumer attitudes towards income protection 12 Source: Mintel Report 2017
Contingency plans if unable to work 13 Source: Mintel Report 2017
Rely on savings - Deadline to the Breadline 14 Source: L&G Deadline To The Breadline research May 2017
Sick pay from work 15
What the state may provide What do you think? 16 Rates correct at April 2018
What the state may provide www.dwp.gov.uk www.entitledto.co.uk www.turn2us.org.uk 17
Income protection claims Don’t trust insurers will pay out – 16% In 2017 we paid out over £1,2 million in income protection claims to our customers and their families. 18 Source: Legal and General Claims 2017 • new claims admitted in 2017 and those already being paid before 1 January 2017 which continued to be paid in 2017
Income protection claims Income protection Critical illness 1. Musculoskeletal 35.6% 1. Cancer 63.8% 2. Heart Attack 10.1% 2. Mental Health 21.5% 3. Cancer 14.1% 3. Stroke 6.4% 4. Neurological 6.7% 4. Multiple Sclerosis 5.1% 5. Total & permanent 3.6% 5. Gastro-intestinal 5.9% Disability 19 Source: Legal and General Claims 2017
Critical illness claims Average amount £64,925 20 Source: Legal and general claims report 2017
The evolution of critical illness 21
Critical illness cover today 22
Critical illness cover today Children’s critical illness Extra Critical illness 41 conditions covered GP24 Critical illness EXTRA increased to 95 conditions covered Nurse support service 23
Income protection – Rehabilitation support Early intervention to support customers on the road to recovery from day one • Free for all new and existing Income Protection customers • Access to a dedicated team of healthcare professionals immediately • Full rehabilitation assessments leading to appropriate treatment advice • Cost of treatments included* • Ongoing support reviews 24 * Terms and conditions apply
Income protection – Rehabilitation support Visit our Adviser centre for all our sales support material 25
Would you gamble? Take a Punt bookmaker Todays odds 45M / 1 Lottery jackpot win * Suffer with Back pain ** 6 / 1 Happy to take a risk on the lottery with little chance of a payout UK average spend £2.90 a Experience a mental health 4 / 1 week on gambling **** issue in any year *** Odds On Death 26 Source: * UK National Lottery August 2016 ** Arthritis research UK *** MIND health facts**** Office of National Statistics Family Spending Report 2015
Budget planner • Mortgage or rent • Lifestyle • Council tax • Clothes • Utilities • Loans • Broadband • TV licence • TV entertainment • Car (inc tax & insurance) • Mobile Phone • Savings • Gym • Insurance • Food policies • Credit cards 27
The cash machine 28
Is income protection too expensive? IPB Low cost IPB Indexation NO Indexation Customer is aged 35 & non smoker 13 week deferred 26 week deferred Occupation – Garage mechanic period period (Class 3) Benefit required £1,500 per month 25 year term £45.88 29 Source: L&G Quote as at 14/05/2018
What change will lead to the largest reduction in the premium of an income protection plan? 2 1 Removing INDEXATION Changing the basis to a LOW COST IPB Change to a Low cost 3 4 basis Changing the deferred ALL 3 have an equal effect period from 13 weeks to 26 weeks
Is income protection too expensive? IPB Low cost IPB Indexation NO Indexation Customer is aged 35 & non smoker 13 week deferred 26 week deferred Occupation – Garage mechanic period period (Class 3) Benefit required £1,500 per month 25 year term £45.88 £17.79 IPB Low cost IPB Indexation NO Indexation Customer is aged 32 & non smoker 4 week deferred 13 week deferred Occupation – Retail buyer (Class 2) period period Benefit required £1,000 per month 28 year term £39.22 £9.72 31 Source: L&G Quote as at 14/05/2018
Income protection is evolving Stepped Benefits Continuous cover Linked claims Life cover Hospitalisation benefit Proportionate Benefit Low cost Income Guarantee 32
Learning Objectives Understand the Income Protection market and the opportunity for advisers in this market to help their customers take protection Understand why is it essential for anybody who relies on an Income to have it protected and the ways to help a customer also understand this. Demonstrate how to bring the benefits of income protection to life and identify a clients needs through sales support tools. 33
Support from Legal & General 34
Support from Legal & General Training for Sales of individual protection policies & Business protection Regular events including workshops, training & webinars Face to face and What next? telephone account Let us know what you managers for support want next 35 35
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