Wisdom on writing protection for high-net-worth clients and why cutting out insurers makes his life easier
Products you advise on: I am a pure protection adviser and advise mainly on life insurance for inheritance tax (IHT) planning purposes. I also advise on personal and business protection where clients have a need for this.
Typical client profile: A typical client is someone in need of life insurance for IHT. Putting protection in place for IHT makes up around 95% of the work that I do. I don't target clients directly, but rely on my professional adviser relationships such as with lawyers and accountants, who will refer their clients to me when they identify a potential protection need. My clients are typically over the age of 50, and can be UK and non-UK residents. The average sum assured I advise on is £4m-£5m.
How do you incorporate protection into your client conversations?
The intention to purchase protection is usually already there as clients will typically be referred to me from their professional adviser. It is then my job to structure the protection to accurately reflect their needs and, where necessary, liaise with the client's other professional advisers to ensure that any recommendations I make will complement their wider financial and estate planning.
What three tips would you give to other advisers looking to write more protection business?
1. Understand underwriting
Underwriting is absolutely key for protection. Anyone can advise on a product, but if you don't fully understand the underwriting process, you can't manage expectations. It's a bit of a hand-holding process, clients need to feel comfortable and understand why things don't go as expected. This is even more important for us because our clients tend to be heavily underwritten given the high cover levels and older ages.
2. Contextualise the premiums
Our clients pay very high premiums, with average premiums in excess of £10,000 per year. This figure sounds high, but in context, for example, reflects the annual premium as a percentage of the total value of their estate, which usually comes out as less than 0.1% per year of the total value. Compared to the 40% IHT liability on death, the £10,000 per year then doesn't seem as costly.
3. Start with protection
Always start the conversation with protection. Whether it's for clients trying to build their wealth and needing protection whilst they do so, or for clients with significant wealth that need protection to ensure that they keep it, protection should form the foundation of any robust financial plan.
How has technology changed your business, if at all?
Technology hasn't actually played a huge role in our business to date because everything we do is still subject to full underwriting and medical examinations. We do use systems like Salesforce as our CRM, which helps us to manage our clients and work more efficiently. We also use IRESS and iPipeline for sourcing, but in the most basic form, more to deliver an initial indication of price to the client's professional adviser before the client is introduced to us.
Given the ages of our clients and sums assured involved, premiums are always subject to changing significantly post underwriting. It's for this reason that we have our own underwriter in-house who gathers all of the required medical information for clients before we approach insurers.
What is the biggest challenge facing you/your business?
Educating enough professional advisers about what we do and how we do it is a big challenge, and I am constantly striving to develop new professional relationships and therefore increase referrals.
What one thing would make your life easier as an adviser?
I won't win many friends saying this, however, it's cutting insurers out of the equation. At the end of the market that I operate in, reinsurers make all of the decisions. Unfortunately, insurers just tend to get in the way and slow the process down. In an ideal world, I would have my own white-labelled fully reinsured product, designed specifically to cater for IHT protection needs. It would lead to faster decisions, lower premiums and, most importantly, happier clients.
What gets you out of bed in the morning?
What advice would you give your 18-year-old-self?
Build a network; it is crucial to being successful and will really help you to keep moving things forward.
What three songs are included on the soundtrack to your life?
‘Ringo' - Joris Voorn
‘Black and Gold' - Sam Sparro
‘Gangsta's Paradise' - Coolio
(I have an eclectic music taste!)
What would you name the autobiography of your life?
Every Cloud. Because I've learnt to see the positive in every situation.
What is your dream job (other than insurance obviously!)?
I would love to do something fitness or health and wellness related, ideally with some kind of charitable element.
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