Not taking out income protection (IP) is like going into a betting shop and wagering that you will not be sick for the next 50 years.
This is according to Gary Waters, director at The Protection Academy (pictured), who presented on the third day of Income Protection Action Week (IPAW).
Waters covered why advisers need to sell IP to customers with families’ hearts rather than heads, demonstrate the direct impact of the loss of income and the ‘betting shop clause’.
Selling to a customer’s heart
Citing the example of decreasing term assurance, Waters called on advisers to resist engaging in “transactional” client conversations.
“If they’re not buying into these needs and a family then probably the way you’re presenting advice isn’t quite right,” Waters said.
“The most common thing I hear advisers doing is let’s say it’s decreasing term assurance.
“‘Mr and Mrs Customer, you’ve taken out a mortgage for £210k over the next 35 years. So decreasing term assurance will decrease with the amount you owe which makes it cheaper if you pass away over the term of the mortgage. It will clear the mortgage as well, as long as the rates don’t go up by more than 8%.
“That will cost you £29.38 a month. How does that sound?”
Waters explained that such conversations have not sold anything to the customer.
“They’ve got a family,” he continued. “They have children. They are going to have dependents. They’re a family.
“I call it ‘selling to the heart’. Let’s get them buying from their heart not head.”
Bring in children’s names
Consequently, Waters suggested instead of talking a transactional approach, advisers should bring in the customer’s children’s names.
“When you’re doing the fact find, find out what their goals are, what their hopes are,” he added.
“If you ask someone about their children, they will not stop talking about them. It’s the most important thing in anyone’s lives. Their goals, their hopes, their ambitions.
“When you’re providing protection advice as a solution to these problems, bringing children’s names and details of their plans and goals, you’re providing a solution for a problem they didn’t even know they had – not an insurance quote,”
Decreasing term assurance example
Returning to the decreasing term assurance example, Walters recommended advisers tell the customer that the DTA will clear their whole mortgage should they, or their partner, pass away.
“What this means to you is that if either of you die, the surviving partner and Adam and Olivia will have a mortgage free house,” Waters said.
“They will have a roof over their head and your children will always be safe and always have a home.
“If you present the advice like that, then cost will not be important because it means something to the heart not head.”
Show them their outgoings
And if this approach does not work, Waters suggested showing the customer their outgoings.
“If they’re transfixed on vet bills, Katie’s skating levels, food, car insurance, we’ve all got them, show them that,” Waters continued.
“Then add in the cost in this case of IP or a family benefit at the bottom to show them it’s affordable. It’s still in the outgoings range.
“Then you tell them out of all these outgoings, if you’re off sick for more than three months, all of these outgoings immediately become a problem, because all of them will require payment and you have no money to pay them – except one of them income protection.
“Not only will it pay for itself but it will pay for every other item – Katie’s skating lessons, Fido’s vet bills etc, etc, etc.
“So when you think about it Mr Customer, it’s the most important outgoing you’ll ever have.
“Without it, nothing else gets paid.”
Betting shop clause
A further tool to overcome IP objections is what Waters refers to as the ‘betting shop clause.’
“The betting shop clause is where the customer says, ‘I don’t need the IP’,” Waters said. “I’ve never been off sick. I’ll be fine. Are you absolutely sure you want to make that decision?
“Because not having income protection is like walking into the betting shop every single day and gambling your financial security and that of your family every single day that you will not be off sick for the next 40 to 55 years.
“You’ve only got to get it wrong on one of those days to get into financial disaster – so I’m going to give you a second chance to make the right decision.
“Are you sure you want to decline my advice?”