Kathryn Knowles  00:11

Hi everyone. We’re on season 10, episode three, and Alan is back with me to give me some more underwriting insights. Hi Alan. Hi Kathryn. Today we’re going to be talking about social media influencers and income protection, which is an area that we are seeing more and more. This is the practical protection podcast.

00:41

So how are you doing? Alan,

Alan Knowles  00:43

I’m okay. I’m a bit tired. I’ve been up since four o’clock due to child coughing, but you know that because we’ve had it for a couple of nights now,

Kathryn Knowles  00:50

we do and and your lovely and perky whilst I am grouchy, yeah, very, very grouchy. I my nose, throat and ears hurt, and I am not a happy camper, and I’m

Alan Knowles  01:04

and I’m starting to wish I wore a face mask.

Kathryn Knowles  01:10

Yeah, yeah, you wish. Okay, so let’s go into a bit of a summary. Very, very quick summary. So social media influencers, you know, I think most people understand what that is. We’re talking for people who are generally inquiring about income protection. It tends to be more people on YouTube and tick tock that we’re hearing from, but it can be anything like Instagram, Facebook, Twitter, anything at all, and this is people wanting to potentially protect against, you know, loss of income because of sponsorship from from brands that they get and like, a regular income that they’re getting from certain sources. It can also be things like commission that’s generated through linked purchases. So maybe they’ll advertise something on their channel, or promote something, there’ll be a link of some sort, and then as people click on that, or go through and, like, make a purchase, it’s all kind of done in the background with algorithms and, you know, special things, and that then means that person gets payment and and sometimes people are generating pretty, pretty huge incomes this way. And we’ve got some case studies that we’ll go through towards the end, but I think it starts off, first of all, Alan, so at Cura, we’ve seen quite a few inquiries on this kind of way. We’ve had some quite famous people as well, haven’t we, which has been very, very interesting, very like, Oh, absolutely, yeah, and which has been quite fun for us, but you know, especially on the income protection side for social media influencers. And what I quite like about that is that a lot of the time people generally think of life insurance, critical illness cover, and income protection has kind of been the thing that in the background for a lot of people, whereas when we’re getting inquiries from people with social media, it’s straight in with the How can I protect my income? So it’s quite interesting, the way that it’s a different mindset, but it isn’t something that’s been easy so far to get insurance about. So, so what’s, what’s going on with it?

Alan Knowles  02:54

Yeah, so, so, I mean, income protection is definitely the challenging area for these people. And there’s, there’s a couple of issues, really, now that the first one is, what do they actually do for a living? Because, yes, they are influencers, yes they are content creators, but it can vary massively. You know, you could have somebody who’s doing stunts, for example. You could have somebody who is doing cookery reviews. You could have Tom, somebody who’s sitting playing computer games. You could have somebody who’s modeling, who’s, you know, showing off clothes and things like that. It’s a huge variety that people do on this. So actually, you can’t just put them down as, you know, a video content creator or something like that, because actually it’s looking at the duties of their actual job as to what they actually do. So that’s a challenge. And a lot of these people actually do more than one thing as well. So it’s not just the one thing that they do. So actually, how do you define an own occupation for somebody who effectively does lots of different things? It becomes very, very challenging. It’s

Kathryn Knowles  03:57

almost like, I was gonna say it’s almost like, in a sense that the social media influence part of it, is this a really vital part of it, but it’s almost a little bit the second part, because you’re back to sort of like just with anybody if you, if you take the video and the social media channel out of it, it’s a case of, what is your occupation, right? So what are the potential risks of that occupation from a starting point, and then you’ve then got the added dynamic of it being a social media platform, and there are extra considerations for the insurers that way,

Alan Knowles  04:25

absolutely. And the other kind of part that is a real challenge for this is the income so one is the income levels. As you rightly said, some people earn vast amounts of money. You know, it’s in millions of pounds per year. And obviously income protection has its limits as to how much you can cover, but actually the other sort of problematic area, and it comes down to what you mentioned about sponsorship and commission and things like that. So income protection doesn’t cover loss of sponsorship. And loss of sponsorship can come for a variety of different reasons. So the loss of sponsorship so. Could be due to an illness, but actually, does that illness meet the insurance definition that somebody can’t do their own occupation, or are there other factors? But even then, when you’ve got things like commission just because somebody’s poorly, and let’s say they’re a tick tock star or something like that, and they earn lots and lots of money through their videos and through their commissions and things that they get through all the codes that they’ve got on their shops and the likes, does that income actually stop when they’re when they’re poorly? And if and at what point you know, is it that it’s, you know, after, say, I don’t know, a month or three months or six months or 12 months, but actually, is there residual income going on, potentially even further than that. So you’ve got to really get under the skin and try and find out what are the sources of that income, and what’s going to prevent that income, and what kind of a drop Are you going to have with it as well. So to me, they are the two main issues. So one is actually looking at the duties and the occupation and the variability, but then also looking at the income and the ups and downs and the variability and the continuation of that income if they’re poorly as well. I think

Kathryn Knowles  06:07

another thing, just sorry tagging on from something that you said there is in terms of that sponsorship, and like you say, it could stop if somebody’s ill, I think, and I did see this as a response from an underwriter in last week or so, is the fact that it’s obviously, it’s not just that. It’s also the fact of, you know, does this person understand lack of sponsorship or reduction of sponsorship because you’re no longer popular, or because you’ve maybe said something on social that was actually quite contentious, and they want to distance themselves, for you, that isn’t going to be covered by an income protection policy, because, you know, it’s, it’s, it’s quite a fickle kind of area, in a sense of, you know, you’re popular. Some people are popular one minute, then absolutely, what is it blacklisted the next day, you know, kind of things like that. And then you get others who, obviously, who bounce, who just keep going and going and going popularity. But it’s, it’s also making sure that the client understands exactly what it will and won’t cover. Because, you know, it, there’s probably some things that they’re wanting income protection to do that it isn’t going to do. It’s not going to protect against. You know, the sponsorship going it will help potentially protect, you know, as you say, you know, if they were doing something and they could no longer do their job, and you know, they can’t bring that commission in anymore, then yes, it can potentially, you know, if they have to stop doing their YouTube channel, it can potentially kick in if they’re ill and sound off work. However, it’s a very grayish area, actually, for people to understand. But I think it’s almost a little bit bonding to that self employed thing, isn’t it, in terms of, like loss of contracts and things like that, and getting people to understand exactly what that is going to do. So

Alan Knowles  07:45

it reminds me, I mean, I’m going back 1520, years now with this one, but at some point in the past, I’d struggled to get income protection for an author. Now, that’s not really a problem now, and you know, we can cover authors non stop, but I remember the underwriter specifically saying to me, the problem is we don’t cover lots of merger. And that just stuck with me. I was like, kind of, you know, that puts it into perspective, actually, and obviously, yes, there are other ways we can assess it, but it reminds me of, of that when we’re looking at the, you know, the social media influencers, absolutely. And

Kathryn Knowles  08:15

I think, you know, it’s how sometimes, obviously, we always stuff like, can be a little bit, you know, insurers aren’t doing this, or they’re not offering that, you know, things like that. But ultimately, as well, the insurers want to make sure that if they are giving a policy that it’s that it’s very clear cut about can they make, can they pay a claim? You know, they don’t want to take on something where it’s going to be gray and they’re like, Well, can we? Can’t We? Because everyone’s just going to open up in a world of negativity if a claim were to come in, because somebody’s possibly going to think, well, this isn’t going to this hasn’t covered me. When I thought it was the insurers, possibly they’re thinking, Well, look, this is really gray, and we’re really not sure if we should be doing this or not. And yeah, there’s, it’s certainly a tricky, tricky, and this is it’s so emerging, as well as social media side of things. It’s, it’s probably the last few years that we’ve actually started to see a lot of the inquiries come through and and as with anything insurers need time to kind of like, adjust to, and some have, though, have absolutely

Alan Knowles  09:10

and we are seeing more availability. And I think that’s that’s really interesting as well, because the last thing that we want as an industry is a social media influencer with five or 10 million followers, or even more, blasting the insurance industry for not paying out a policy. Yeah. So if we’re going to do this, it has to be right? That

Kathryn Knowles  09:27

is very, very true. So what would be the main underwriting considerations that are going to make things trickier to get income protection, if you’ve got a social media influencer coming to you, if somebody was to come to you right now and say, I’m social media influencer, and you go, wonderful, we want an income protection. What’s your occupation? What kind of occupations or kind of duties, in a sense, are you? Are you gonna be thinking, well, this is gonna narrow down the insurer type. Yeah.

Alan Knowles  09:52

So, I mean, if you’ve got someone who is, say, reviewing products, or somebody who is. Is, I guess even you’re sort of talking through games and things like that, and videos, you know, where it’s relatively sat in your home studio, just doing non risky kind of work, you’re probably going to find somebody who will do that. Now, there’s not a lot of providers who will play in this space and do it, but you know, they’re relatively low risk. If you’ve got someone who is getting on a piece of wood and sliding down the side of a volcano, or, you know, somebody who’s getting in a

Speaker 1  10:29

I think we could have said that on a call away, volcano surf. Volcano surfing,

Alan Knowles  10:34

yeah, a plan called and if you, if you, if you Google volcano surfing, it is actually a real thing as well. We’ve, you know, if you’ve got someone who is, and we’re seeing a few of these now, and obviously some very famous ones on this as well. But I guess in there’s probably some not so famous ones as well. But people who are doing the MMA fights, and, you know the boxing, I mean, actually, if you had a box or an MMA fighter, you’re going to struggle to provide them income protection anywhere. So why would it be any different for an amateur who’s then getting in the ring, potentially with a professional or somebody else, and potentially getting beaten up, or, you know, risk of injury, etc. So again, kind of throwing in these elements can obviously, you know, they all make an impact. So just looking at the actual duties as to what this person actually does, what makes up the day to day? What are they doing? If there’s anything that’s more extreme, and primarily, what would stop them working? You know, what would actually stop you doing your occupation? What would stop you? What you know, what kind of illnesses would prevent you from working? And then, of course, we do have to factor in the the income whilst that it is underwriting, it’s financial underwriting, and insurance might not necessarily ask the questions, depending how much benefit you go for, but you’ve got to understand what’s going to what’s going to make that income stop, and at what point will that income stop? Because if it’s not going to stop, or if it’s not going to drop enough, then an income protection party might not even be suitable, or suddenly, with a short deferment,

Kathryn Knowles  11:58

yeah, I was going to say so just to be sort of like, bring that down and sort of like, make it super basic in terms of the way that is, you know, income protection is all about paying out a claim when you have a financial loss. So, you know, we sometimes have this as well, if we just move away a little bit from social media influences. So I’ve seen this, and I’ve seen, I saw a really sad case of this, actually, where somebody came to me for support and because they’d been set up an income protection policy. They were a company director. They’d been set up with a 26 week deferred period, so a half a year. And the thing was, is that they weren’t well and they couldn’t work, but nobody had, sort of, like, explained to them the fact that, but you need, it needs to also be a financial loss. So the company had carried ongoing. You know, other people have been stepping in, but they’d still been taking their income, their drawings and everything, and that made it hard for the claim, because obviously, well, the insurers, they’re going but you’ve not actually, you’re not actually financially hard done by Yes, you can’t work, and he was going through a horrible medical situation. But, you know, it was really, really hard. So, but I think if we go from what you say, from what I said earlier, as well, back to recap that in a sense of, look at the occupation first, kind of strip away social media influence and start with, what is the occupation? What is going on? How is that income coming in? How consistent is that income? How much is it fluctuating? Because a lot of the time they’ll have the insurers, if it fluctuates a lot, they’ll say, maybe take an average of the last three years, or something of that kind of a sort which can be can change very, very much so in terms of somebody who’s working in a social media space. And then once we’ve got that, then you probably, once you’ve established what’s available at that level, then we’re going to narrow it down to what can then be available for some of social media kind of aspects to it. And then what we need to do is, then, kind of, as you say, sorry, look at right? So this is what’s kind of potentially available, but what is going to happen in the sense you just be really clear to them, how long will your residuals keep coming in for, or how long do you foresee them coming in for? And then that will probably be your way of determining the deferred period. Yep, and, but again, we might need to have, you know, specific caveats to say in there, you know, sort of, you know, you know, we’re going to put in this deferred period, because at this moment, you feel that your commission will keep coming in for the for three months. But obviously, if all of a sudden they get even more popular, and actually, it would carry on for the next six months. Six months. We need to be sure that they need to know, that maybe we need to review the cover, or that they know, right? Well actually, if I’m going to keep getting this residual for six months, or even four months, that’s going to delay when the financial support from the income protection policy comes in. So before I come to the case study, so what would you be expecting? So we always like to say social media, influencer, life insurance, critical illness, income protection. Can you give us a rundown of what you’d expect? So life

Alan Knowles  14:47

and CI for the majority, I’d expect standard terms, as long as they are not doing anything or not BASE jumping exactly like surfing, exactly, and then you would love them as you would expect, you know, etc. Etc. So yeah, life and cake, generally. Okay, income protection. Now, there’s three routes that I can sort of really see for social media influencers. Now, the first is income protection as we know it, a fully underwritten policy. There are a couple of providers who will consider and will look at this. They do tend to be more around the friendly society type of income protection provider, where they can be a little bit more. Think of the right word, open to occupations. Yeah, exactly, exactly. So they are worth discussing these cases, but it is very much case by case, because they will want to know who they are, what they’re doing, income, etc, etc. And if you do get it standard risk, it’s not going to unlikely to be any exclusions or anything like that on it. The second option, and we’ve utilized this sometimes, is that you can do accident sickness cover so accident sickness, unemployment, but without the unemployment insurance. Obviously, most of these people are self employed. It’s

Speaker 1  15:58

a bit tricky on the unemployment side. If you’re self employed and not want

Alan Knowles  16:02

to go down that road, no, but the accident and sickness cover guaranteed acceptance to a degree they do factor into A into occupation, and some of them do exclude certain occupations, but there are some that are very happy to cover YouTubers, tick tockers and a variety of different social media, sort of video outlets. And then the last kind of route is you can approach Lloyds of London. So if you, if you’ve got access to the syndicates, through Lloyds of London, usually using a, you know, specialist broker of some description, you can arrange an income protection policy. It’s usually annually renewable. It’s usually got a five year claim and then a sort of total disablement at the end of it. Usually annual premiums, usually very, very expensive. More useful, probably for your very, very high earners, I would say, for that one. But there are routes for people who, you know, obviously really need or really want the cover. That’s about it, really. That’s probably best somewhere.

Kathryn Knowles  17:04

Thank you. Right. So going on to the case studies, and we do actually have an accident sickness example to include, I think it’s important to say as well that with some of these options as well, like if somebody was doing sports, that’s another dynamic as well. So you know, if somebody’s, like a BMX rider, or I’m trying to think of something that’s usually probably, I’m thinking, probably more like a motor sporty type things, because that’s why I imagine probably more risky in the UK, something like that. Yeah, you know, there’s, there’s, that’s an extra dynamic. So not only going to be looking at the occupation, you’ll then be looking at the social media thing, and then you’ll also be looking at the sports side of things as well. So I’ve got to do the first case study, and with this one, I want to just say from such so every case study that I do on the podcast is somebody who has gone through to and the policy going live now with this one. On this case study, this one didn’t go live, but I thought it was interesting to bring in based upon what we’ve said in terms of the considerations. And so I wanted to to just give this example to everybody. So with this person that we’d offered some support to, they were in their late 20s or a non smoker, and they were model on social media. And so we have the first thing there is that they are a model, and models are quite difficult to get income protection for, regardless of the social media aspect of it, and there’s quite a few different considerations. There’s some consideration in terms of health. Obviously, models tend to have quite a low BMI, and low BMI is sometimes seen as more risky than a higher BMI with quite a lot of insurers. There’s also, you know, potentially, there’s lots and lots of pressure and strain generally under the model occupation, in terms of travel, in terms of lifestyles, things like that. But with this person, you know, we found an insurer. They were fine with model and they were fine with social media influencer, and we’re talking before about fluctuations in terms of income. Now, this person’s earning anywhere between 15 to 30,000 pounds a month in terms of their commissions, through their through their social media channel. So that’s a huge difference. That’s not a small fluctuation. You know, we’re literally talking it’s double one month compared to another at times. So when we were looking at this, some insurance are also declining, because they were saying that the popularity could drop overnight and the income could stop, which would then, you know, make the policy pretty much worthless, in a sense. And you know that they were, they’re just cautious of the way that the the market can work in terms of social media, some of them don’t offer because fashion model is not an accepted occupation. And another reason that this one was interesting, like series, very much a case, you know, sorry, giving bring it to everybody say, you know, don’t just go by what the online system say. So we’d contacted a provider, and what they said to us is that, and you know, I’m not saying that this is the the way to go or anything specifically, but on this situation, we were given permission to lie on the app. Application and put this person down as a different occupation, because they basically said, we can accept them as a model based upon what you’ve told us, but our systems will not allow model. So what you need to do is put them down as this occupation, then immediately email us with all the confirmations the application references to say to us, this is the person we’ve been talking about, who’s actually a model. So, you know, if you are just somebody who is looking at online systems and what might be available that way, you might potentially miss some opportunities. But you know, obviously we each do what we can do. You know, if you’re not able to speak to underwriters, and you maybe want to sign post and get somebody who can do some of these extra little bits around the background. So we did find a potential option. So to just give an example. So if looking at around 5000 pound per month, because this was what the was requested. You know, we’d have suggested a bit more than that to cover the income, but it was requested for 5000 pound per month. It was a four but four week deferred period, because I say, we want this kicking in soon. We don’t want to be having to be reliant, potentially, on the residuals. Because, you know, for this person, especially, they would have dropped down very, very fast. And it was to age 68 and on a reviewable premium that was 37 pounds per month, a guaranteed premium would have been 82 pounds per month. The second case study that we have is an accident sickness. And again, another model, which is interesting. So with this person, they were an only fans model, early 30s. And with accident sickness, you do often get a cap on the amount of monthly benefit that can be done. And also, there is a point where once somebody reaches a certain income the some of the accident and sickness providers just won’t cover them if their total salary for the year reaches certain amounts. So for this person, we did the maximum that was possible for them. So it was a 2000 pound per month benefit, a four week deferred it is annually renewable, and the premiums 31 pounds per month. Now I’m not sure if we said this when you originally talked about accident sickness cover on so I’ll just say now accident and sickness cover does exclude claims for existing conditions until you are, say, like a certain period of time, clear from treatment, follow up, things like that. Now this person didn’t have any any risks at all, so there was nothing there to be concerned about in terms of any exclusions. The reason that we had to go on the accident and sickness part of things was the fact that the type of of modeling that was being done and or else we’d have hopefully got the income protection side, yeah.

Alan Knowles  22:36

And what the insurer said with this one is that there are other risk factors that are involved in that type of occupation as well. So that’s why they wouldn’t do it on an income protection whereas, for say, the previous model, obviously they could have absolutely

Kathryn Knowles  22:50

so I hope that’s really helped everybody. I’m sure we are getting a lot more of these inquiries rounding about Thank you for listening everyone, and thank you Alan for joining me. Very welcome. Thank you for having me. Next time I’m going to be chatting through some simplified income protection options that are available within the UK, please visit the website practicalhythm protection.co.uk, for all of our episodes, you can also get them on all major podcast platforms, and don’t forget that on the website as well, you can get access to your CPD certificate. Thanks to our sponsors, the Okta members. Thank you, everybody. Bye, bye. Everyone.