LifeSearch's Malcolm Robertson says the group protection market is lagging behind for advisers in terms of technology and admin. Here's why.
To make appropriate recommendations for group and business protection advisers often need to look at each potential product area.
If you are writing individual protection business - and especially if you are writing relevant life cover, it is essential to also understand the group protection market.
When considering group protection, compared to arranging family or mortgage cover for example, it can often be the harder path for the adviser in terms of increased administration.
Even when using some of the newer systems it can be a much more time intensive process.
It can often be the better path for the client though. Providing people with optimum cover for their budget is paramount and the persistency of group business is generally much better than with individual products.
One of our most recent examples was a family business of eight people.
The enquiry came through as an individual person looking for cover and as an employed director and shareholder of a small business the client began talking about personal cover for himself.
We moved the conversation on to relevant life and key person cover, but ended up recommending group protection for the entire business.
Relevant Life is an interesting development that is helping to grow the market, but it shouldn't be the default option.
We could have just covered the MD, or perhaps recommended eight separate relevant life policies - and while this may have looked better for the profit margin, the client would be paying higher premiums as well as going through medical underwriting.
Through group schemes, higher earners can avoid going over the lifetime limit allowance by using an excepted scheme instead of the traditional registered route, or by recommending a hybrid version of the two.
An excepted scheme sits outside of pension legislation, as individual relevant life plans do.
There are challenges though. The biggest downside in today's group market is the lack of portability for employees leaving the business.
So advising the individuals within a group scheme on a personal level can really help the families.
Writing group business can also be time consuming and it is often still surprising that there is currently no quote portal for group schemes.
There are over 30 providers in the market, with some only offering manual quotes, and others whose systems differ greatly.
So perhaps we need an IRESS or UnderwriteMe for the group market; a system that could revolutionise how Group business is bought, making it much easier for clients to arrange cover.
Unlike personal protection, wet signatures (or scanned forms) are still needed by most insurers and product definitions tend to lag behind the personal market, especially for CI - and the lack of underwriting with Group CI can often be a disadvantage when something seemingly minor eventually becomes the reason for a declined claim.
When looking at life cover many employees would often like the ability to purchase more cover than the typical salary multiple.
A ‘bolt-on' option for additional cover here could be very useful.
It seems that insurers want to keep their individual and business propositions separate from each other.
As insurers often do with life and health. But could there be long term benefits in combining them? It certainly might make life easier for advisers.
It is important not to completely confuse our clients, but understanding the combination of employee, business and personal protection is becoming essential for protection advisers.
And when compared with personal protection the group market is lagging behind and needs to catch up.
Malcolm Robertson is business protection & group leader at LifeSearch.
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