Written by Greg Levine, Chief Operations and Growth Officer, Vitality
The economic outlook for many in the UK might be gloomy, but this has increased the need for financial protection advice, not lessened it.
A perfect storm of continued high inflation and increasing interest rates is adding to the severe financial pressures facing households this summer.
Given the increasingly poor financial resilience of many UK households and the pressures people are facing, the expertise of an adviser is likely to be valued more than ever at this time.
The need for financial protection has increased
Whilst the ongoing cost-of-living crisis and rising mortgage rates are undoubtedly placing severe cost pressures on individuals and households, there is arguably also a heightened need for clients to be adequately protected.
Recent research published by the FCA highlighted a significant increase in low financial resilience amongst UK adults as a result of rising living costs. For many of these people, they face the risk of serious hardship if they were to experience a financial shock
Protection insurance like Life Cover, Serious Illness Cover or Income Protection is needed now more than ever and whilst many may be tempted to forego insurance or cancel existing cover, this is a risky move.
The new Consumer Duty regulations arguably also make protection conversations a necessity as part of a broad drive to deliver good outcomes and avoid foreseeable harm.
Unlocking client value
At a time when budgets are tightened and consumers are looking at what cutbacks they can make, there’s always a risk that things like insurance gets cut.
The intangible benefit offered by insurance – and the promise of a payout if a claim arises – can often be difficult for consumers fully value when times are tough.
This is why it’s important that advisers help clients to unlock more immediate value from their protection cover, that they can use every day. The growing range of health and wellbeing benefits and rewards that plans now offer can be a great way of doing this.
Driving better retention
If a client sees a Direct Debit leaving their account each month but associate that with a range of everyday benefits that they’re using, alongside core protection insurance cover, they’re hopefully far more likely to recognise the value of that plan.
Unlocking immediate value though requires good, meaningful client engagement, with access to health and wellbeing benefits and rewards seamlessly integrated in their everyday life.
This approach can lead to much better persistency and rates of retention – on average two thirds more for highly engaged members – as clients no longer see cover as something that delivers zero benefits other than peace of mind. This is obviously good for clients and advisers alike.