Hi everybody, I am back to chat about the times in a person’s life when things like life insurance, critical illness cover and income protection, really stand out. It might just be a natural next step in our lives in terms of independence and a growing family, or it might be that something unexpected has happened.

It’s very tricky as an adviser as we know that our clients could really benefit from x, y, z, but they might not be open to discussing them. You might find that your client doesn’t want options for income protection, but you could still put in your recommendation that they need it and a basic cost for it.

The key takeaways:

• Life milestones include buying a home, getting a new job, starting a family, losing a loved one, getting divorced and more
• As an adviser we might see a need for life insurance, critical illness cover and income protection, but we have to be mindful that people don’t ‘have’ to take these out
• Whether you integrate protection insurance into your own work, or signpost to another firm, either way is fine as you are making sure the client is getting a chance to see ways to protect their finances

Next time Jo Miller is going to be back with us, talking about all things Income Protection, with updates about the Income Protection Taskforce.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website, thanks to our sponsors PlannerX.

00:12

Hi everyone! It is season 12, episode eight, and today we’re going to be focusing upon life milestones and when to bring in those protection conversations. This is the Practical Protection Podcast. So there’s a few things for us to chat about, and I think you know talk about the life milestones is one of the key areas that I tend to hear from advisors who are wanting to do more protection insurances, sort of like where do they bring it in, and I think it’s really it’s really tricky. It’s really to do with mindset and everything, but it is very very much mindset. But also, as well, making up that decision between: Are you doing it yourself, or are you going to signpost and bring somebody else in to do it? Because I tend to find so. Obviously, we at Cura just do protection insurance. We’re doing it day in, day out. We would have, in many ways, loved to have started to do mortgages and pensions, and we even did for a while ago. We did private medical insurance for a while, things like that. And you know, we’ve just not been able to do them. We actually even stopped doing private medical insurance ourselves and signposted to someone else because we know that we just don’t have the time to learn all the ins and outs of that and really do the best job for clients. And what I tend to hear from people who are working in the other spaces, like mortgages, pensions, investments, things like that, is that they see the need for protection insurance, but it just comes down to the actual, just having the time to do that on top of everything else they’re doing for their main specialist area anyway. And signposting is massive. You know, there are so many people that are doing it, you know, insurers do it, networks do it, individual firms do it, charities do it. You know, there are so many different areas that signposting really, really steps in, and I think a really key thing with that is people tend to think of it in as sort of maybe a oh, what am I saying? I don’t know what I’m that I’m not good at everything, or am I saying that I’m not capable, or is this other firm going to come in and steal my clients and things like that? Well, the really key thing is to sort of think away straight with that. Is that when you do signposting, just make sure you have a very, very robust introducer agreement in place, which would mean that the other firm can’t just come in and suddenly swipe your clients and all that kind of thing, but in terms of so like wondering, are people going to think that I’m not really good if I want to bring someone else in? I think that’s something that we should really need to nip in the bud straight away because of the fact of let’s say you were speaking to an accountant as an example, and they suddenly were doing their obviously their version of compliance, like well, we have an insurance, and they’re like, “Oh, do you have a will? And you go, “Well, no, or yes, but it was done 12 years ago. I need to review it. The accountant is very unlikely to go, “Well, just give me a minute, and I’ll sort that out for you. Sorry, I’ve still got that dreaded call, so every now and then I will have a cough, but I do have a cup in front of me to help. No, the accountant is going to go right. So, do you have a solicitor to do that will for you? And you’re probably going to say yes or no. And if you say no, they’ll probably suggest somebody to you. It’s no different to that when we’re doing things in the financial services industry. People have different specialisms, and a lot of the time, I tend to find when people are being signposted, they’re actually they’re really grateful for it because of the fact that they know. Do you know what you know this inside and out? You’re doing it day in day out, so I know I’m going to get the the best job done for it. So we’ll just sort like start with that there and then.

03:56

But when it comes to things like when do you bring it into your conversations, I would suggest that obviously for each person in the financial services space, we would have what’s known as our fact find or something else that’s equivalent back to that name, and you’re going to have in there all the information that you need for your area. So what I would say is it’s this thing of like it’s either change of mindset or bringing signposting. So you either include in there a statement saying, you know, do you have this insurance in place? Do you not have it in place? Things like that, and then from there you then branch out as to what is right for you. Are you taking it on yourself? What are you going to give it to somebody else to do for you? And and I think probably mortgages is a good one to sort of like really make this stand out as well, because with mortgages we’re putting clients in a position where they are taking on quite a large debt. Usually, it’s probably one of the largest things that they are going to take on in their entire life. It’s very very common, obviously, to have a mortgage. They are. Brilliant in the sense that they get you to you know obviously be able to own your own home and work towards that goal. But a lot of the times, kids. So what have we done to protect the family to be able to stay in the home, or even just if it’s this person on their own to protect them so they can stay in it? Well, the two key things there straight away, without any kind of doubt is life insurance and income protection, and let’s just say if we’re stripping it down to the absolute basics, then it’s income protection because then you’re covering everybody who’s probably going to be going for a mortgage of some sort. In most likelihood, they’ll be taking in some kind of an income to be able to carry on paying off the mortgage, whether or not that’s through obviously doing some kind of like a buy to let, or if they have a salary, there’s lots of things about it. But essentially, we need to make sure that that mortgage repayment is going to continue happening, and the best way for us to do that is to protect the income. So it’s very rare, I think. Obviously, not everyone will agree with me, and I do appreciate that people in the pensions and high net worth space and investment space might disagree, obviously, with their clients, but it is quite a rare situation I find where there is absolutely no need at all for some kind of income protection. It might not be huge amounts; it might actually be quite considerable amounts, but there is usually a need for it. And when I was saying there about quite considerable amounts, I always remember that there was one advisor that had worked with us previously, and I’m just going to make a figure here. But the person that we were speaking about, a client, was earning something like £150,000 a year, and the advisor, just because you know they were pretty new to everything and hadn’t necessarily faced every single option that you would see in terms of clients, they’re like, well, why on earth would they need income protection? You know, they’ve got so much money, obviously, because to them, I suppose in their minds, if that person’s income is so much more than their own, they’re thinking, well, they can’t possibly be spending all of it; they must be saving or stuff like that. But ultimately, what you you do tend to find is that people will spend, and some obviously will save to the limits of their income. So actually, somebody who’s earning 150,000, if they don’t have any enhanced sick pay through work, and their income suddenly goes, that is a much, much. I mean, no matter what who it is, it’s always an awful financial hit in that situation. But their financial hit is going to be really big because they’re going to have to really skip back on so much more stuff. They’ve probably got a higher mortgage. They’re probably far more likely to reach point where they can’t make those mortgage payments.

07:27

Potentially having to look at downsizing and everything like that. And if you think about it as well, when they are actually having to do that, if we talk about the situation, they have become so ill that they can’t get back to work. So not only are they going to be facing that really, really intense emotional, potentially unlikely physical and emotional impact of that change in terms of not only their health but then that forward outlook for the rest of their life. That there is a real-I can’t think of the word for it, but there’s a real thing. I’ll put it that way for somebody if they are suddenly told that they can’t do their job anymore. You know, it’s it’s a real hit to know that. So on top of all of that stuff, we’ve then also not protected the income. That’s there’s lots and lots going on there. But I think a really tricky thing is, and people, you know, we can all say this. We can all understand it. It’s that whole thing of like, well, how do we actually get people to to want to do it? Because as with all protection insurances, they are not legally required. Obviously, other insurances can be depending upon situations and what people have in their lives and things like that, such as things like car insurance, stuff like that. But your life insurance, your critical illness cover, your income protection-it’s very, very few occasions where they are you must have them, and certainly not sort of like really from a legal point of view. It might be a bit of a requirement sometimes for occupation, depending upon what people are doing. But then that’s often provided by the employer anyway. So you know, people don’t wake up generally and go. Yep, today’s a day. I’m gonna get IP absolutely. And I’ve thought about it. Critical illness that’s been on my radar. I’ll sort it. You don’t just wake up with that. Something will have been a trigger. That trigger could have been an advert on TV. It could have been that they read a book and it just happened that somebody passed away in the book, and then suddenly thought, “Oh God, what was if I passed away? Yeah, I’ll need to make sure the kids are all right. It could be that they’ve been diagnosed with something, and actually they are suddenly like, “Wow, I’ve put this off, and and I really do need to get this in place. It might be that a loved one, or a neighbor, someone in their community or something has experienced something that’s really made them think about it. It could even be, say, on the income protection side, it might be that one of their colleagues has been off work for four months and come back and said, “Blumnet, do you realize what statutory sick pay is? You know, or basically, I’m absolutely feeling dreadful, but I’ve had to come back because I just can’t live off that. You know, statutory sick pay. Is really, really quite low, and people don’t realize that at all. And so, again, they might be thinking, “Well, if I get like that, I don’t have to rush back and all this kind of stuff. You know, in a sense, we don’t have to buy protection, but people often need it, and it’s our job as the advisors to make sure clients understand when they Need it, and I think what really need to bring forward is that thing of like we’re going to talk about a few different things here in terms of like the different types of life changes that can happen and where we might be wanting to bring some insurances in. So it’s kind of a bit of an episode that’s really back to basics to say we’re going to be doing this, we’re going to be doing that. But what I would say is even more back to basics. Regardless of what I’m saying here, look at your fact find, look at your question set, and go right. Where can protection come in here in this conversation? And there will be somewhere. It’s there is there isn’t a time when it won’t come in.

10:56

In a sense, whether or not you just are going to say no every single time my client doesn’t need it because you know there might be so high net worth that actually it’s not needed, and there’s already been stuff done in place that means all the IHT is fine, and you’re going to be gifting here, there, and everywhere, and you know it might be that it’s not needed, but the majority of the time there is at least some level that is needed, and even if it is just one question that you put in your fact find that says, “Does this person have X Y Z in place? It could just be, “If not, I’m going to signpost over there, or “I’m going to look at this, and if it’s not something that I can do within a week, I’m going to pass it on. Or do you know what? Yeah, this is me. I’m going to do it. I’m going to make sure I’ve got the time for it. Whatever works right, go for it. But there will definitely be somewhere in your fact find that it happens. And some people will say to me as well, “Well, what happened? Like especially with mortgages, I have this. Well, what I’m going to do is I’m going to have my mortgage conversation, and then once we’re this far down the line, I’m then going to talk about the insurance. I personally don’t think that that is the best way to do things. It might work really well for you, so ignore me if it is. What I would say is that you want again with the mindset you’re going to be speaking to somebody going right. I’m going to set you up a mortgage. I’m also this isn’t you know in a sense this isn’t up for debate. I’m also going to be looking at X Y Z insurance for you because if you get that mortgage and you get your home, I want to make sure that if something happens, you’re able to keep it. There’s not many people who are going to straight at that point go absolutely not. Don’t you come at me with insurance options? Most people go, you know what? Fair enough. I’ll have a look, and then from that point, do you know what? You just give them the really kind of like you can even just give them the stripped down basics options. You don’t have to go for all the singing, all the dancing. Obviously, there’s there are benefits to doing all singing or dancing. But if it’s just to get that initial idea, that initial thought of pricing, what it could look like for them, then do that and get it in front of them. And then from there, once you’ve got the interest and they’re actually seeing the benefit of it, that’s when you can go and do you know what? Actually, we can look at this. It’s a good option. I would prefer it if I could maybe suggest this one over here. You know, it’s a bit more pricey, but instead of it paying out, if it’s IP, instead of it paying out for two years, it pays to retirement. I think that’s worth considering. It’s better than them not having any conversation whatsoever, and again, if you are somebody who is going to be signposting, then we’re going to say to them at the beginning, right? I’m going to do your mortgage, but you also do really need to consider these insurances as well for the exact same reason. I want you to be able to keep that home whilst I’m doing my research and sorting this for you. I’m going to suggest that you speak to this firm here, because then what they’ll do is they’ll work alongside me, and we’ll do it together, so that when the mortgage is ready, everything’s sorted. It’s really, really simple to do. I say simple to do, and I’m sure most people who are in this situation are thinking that’s not simple to do at all, or my resources and everything. But it is just taking that step to just alter your fact find, bring in that question, and then knowing what you’re going to do from there. So when it comes to the triggers, so the first one we’re going to talk about clearly is something like buying a home.

14:12

So we’re going to be most of the time getting a mortgage. At the bare minimum, we really want to be looking at income protection, some form of income protection, because no matter what, they need to keep up those repayments. If they do fall ill, they’re going to have a massive, massive change to their lifestyle. The last thing they want to do is lose their home. So we really do want to be looking at that. And I’m sure anybody who does work in this space knows that with income protection, there’s about 50 billion different options that we can look at. And sometimes that’s even just with one insurer. You know, I know I’m exaggerating a bit, but there is huge amounts, so there is usually an option for most people, and you are probably quite likely at the least wanting to look at life insurance too. A lot of people obviously take out mortgages with a partner, or they might have children, so we again want to make sure that if anything happens. And they do pass away. That it is that at least that sort of worry about the home is is gone. They know they’ve got the home. It’s theirs, done and dusted. And life insurance as well. I mean, the reason that it’s so popular is it’s the cheapest one out of all of them. Usually, it’s usually quite straightforward to get. Yes, there are disclosures that can make it different, and that you want to bring different insurers in or different options in. But it is huge, and it’s the one that people know as well. People tend to be like, “Oh yeah, life insurance. But if you mention critical illness income protection, they often have a vague idea of what they are, or they’ve never heard of it. So you often do get people being quite open to speed to the life insurance, and then that’s when you can kind of segue them with the other things as well. So obviously, if they are single, you’re going to be income protection, probably critical illness cover, as well as a higher focus. As always, I have spoken about this before with critical illness cover. You can get standalone critical illness cover. There are some occasions with disclosures where it is better to do standalone rather than to combine it with life insurance, but do bear in mind that if you don’t combine it with life insurance, there is a survivability clause with critical illness cover. Very very quick recap, but obviously please to go back to previous episodes if you want to know more. But essentially, survivability clause: someone’s got standalone critical illness cover. I’m going to talk bluntly here. They have a heart attack on the Monday. They pass away on the Friday. If it’s standalone critical illness cover, it will not pay out a claim because they need to survive the initial diagnosis by a set amount of days, and that’s generally between 14 and 28 days. If you combine it with life insurance, it automatically transfers over to a death claim. Now, the times that that really stands out for me is when people will be asking you to review their cover. They’ve already got life insurance, and you say, “Right, well, I suggest you have life in Krystle. And they go, “No, no, no, no, no, no. I don’t need life. I’ve already got life. Stop trying to give me life. And then you say, “But are you aware of the survivability clause? And I don’t think I’ve ever had anybody when I’ve explained the survivability clause, gone. Yeah, don’t include the life insurance. You know, everybody goes, no, I’d rather include that, and especially because it’s either no price difference or sometimes very, very minimal price difference. And when I say minimal, it’ll be something like, and again, I’m making this up off the top of my head, but let’s say the total amount for life and kick is 30 pound a month. You’ll end up finding out the life insurance is probably what a pound one pound 50 out of all of that price, because the likelihood for the claim is so much more on the critical illness cover. So most people will often decide, oh well, we may as well include that as well. Um, so definitely income protection. Just really, really make sure.

17:44

As a minimum, we’re definitely going to keep an eye on income protection, and it’s so many ways to build it up that the pricing of it varies significantly. Okay, now what about the next thing? So let’s say we’re starting a family. Now, once we are starting to obviously start a family again. We really do want to make sure we’ve got the income protection in place. I did do an episode a few years ago with a woman called Kara Gammel, and she came on to discuss how both of her parents had income protection, and how they had both needed to claim on it, and just what that meant for her, and what that meant she could carry on doing as their child and as their family, and what wouldn’t have been able to happen if they hadn’t had that in place. And I think that was a really, really important episode. So I do suggest going back and listening to that. The general consensus is, if you’re looking at supporting a family, is that you would look at life insurance at a minimum. You know that is going to be a huge impact to the family, and so often term cover. So term usually to match the mortgage, potentially to retirement. Quite often, potentially until a child is at age of independence. Now, age of independence is very varied. We, I often have people say, “Well, I think 18, and other people have said age 30. It really, really depends upon the individual, and often comes down to the cost as well of the different options. Some people as well are quite fond of doing family income benefit, which, as I’ve said before in previous episode, is fantastically named because it’s nothing to do with income at all, and it is life insurance, which is no end of confusion, obviously, to everybody. But family income benefit, you are going to ensure a certain amount of money per year that the policy is active. So it’s almost like a decreasing pol. It is a decreasing policy, but not in the decreasing term way that we would usually describe it. Because why would we say it like that and make it easy for all of us? But let’s say that I’m going to make it really easy here for my head, if that’s okay. Let’s say we insure somebody for 20,000 pound a year for five years. We’re just we’re doing it to just cover off some private education for the child for the next five years. So in year one, the amount of insurance that’s potentially available is is around 100,000 because we’ve got five years of 20. So when we get to year two, well, 20,000’s gone. So now the amount that’s potentially available is up to 80,000. Then the next year, up to 60,000. So as you can see, it’s decreasing by a set amount each year. Now that can work really well, and some people really like that. But do think about what the client’s goal is on that, because you do you can find quite quickly that the summer short becomes very high. You start going into medical underwrite, extra medical underwriting, so GP reports, medicals, potentially financial underwriting as well, depending upon how much you’re insuring for and for how long. Because it isn’t just oh well, I’m I’m insuring 30,000 for the next 21 years. It’s 30,000 times 21. So we’re starting to actually go into the high some assurance. And if you just did that as a block amount, as a level life insurance from the very start, then that’s what you’re kind of looking at in terms of your underwriting requirements on there. In most instances, we also do have the option to RPI link, which is brilliant because 100,000 pound insured now is not going to have the same value as 100,000 pounds in 20 years’ time, but we just see what is relevant, obviously for that client. Obviously, critical illness cover great. Definitely do what you can. Include the children. Be mindful that some insurers allow you to set the amount of insurance for the child often anywhere from around 25 to 100,000. Others will have it as a set 25,000.

21:28

Now this is a really key point as well as that if you are replacing an old policy with a new one, be mindful that some older policies used to do around 30,000 for children potentially, and they might have brought that down now to about 25,000, so it is a disadvantage. So just be really, really mindful of that. There’s so many different quirks and everything that we need to be on top of. But including the children is obviously a really positive thing, and you also might want a future guard as well. So if somebody, if you’ve got a couple speaking to you that said, “Oh, we’re going to have kids in the future, and you are doing critical illness cover. You might want to include it on now as well, because depending upon the insurer that you use, there are some specific options that can be specifically there to support families if there is something that happens while the baby is developing, while the woman is pregnant. So definitely look out for all those caveats and things. The things with critical illness cover is definitely don’t scaremonger. I have absolutely come across people who’ve said to me, “Oh well, I was trained to do it like this. Where I say to them, “So what are you going to do if you have cancer in five years? What’s going to happen to your kids, eh? That is an absolute no. Just don’t obviously definitely don’t say it like that. There’s ways to say it and ways not to say it. So we are going to be saying to people, you know, we would, you know, it’s important to consider things like critical illness cover. You know, it covers cancer, heart attack, stroke. You know, they are diagnosed pretty, you know, a significant amount of time every day in the UK is something that people are more and more, it’s happening more and more, basically. And you could even go into stats. You know, it’s now more than one in two people will be diagnosed with cancer in their lifetime. You’ve got the fact that I think it’s every five minutes in the UK, someone’s taken to hospital with a heart attack. It is happening, you know, and it is something that people need to be mindful of. So try and keep it, try and keep it to the facts of what is actually happening. You don’t necessarily want to do the stats. It’s completely up to you. Just find a thing that works for you. But we don’t want to be. We need it to be relatable to them. But we don’t want to be saying very specifically. You know, to the point of like you wouldn’t want to be saying like the children’s names or something like what’s going to happen to little Arthur and Josie if you suddenly have you know a breast cancer diagnosis or something like that, you know that is too intense. So just try and get a a light a light mediumish level as to what you can and can’t say. It might even be that with things like in terms of like where is this happening when you’d be starting with family, it might well be that you’re a mortgage advisor, and that’s coming into it. Might be that you’re doing you’re a cash flow specialist or pension special investments. You know, you might wonder, well, where am I starting the protection conversation? Is well, it’s possibly once you’ve already covered everything off and sort of gone through things, they might be talking about, well, I’m thinking of setting up a junior ISA for my kid or a pension for my kid, and at that point, we’re thinking, right? Well, yes. So they’re obviously very mindful about what’s happening with their children for the future. We’re going to be looking at this, looking at that. What does the junior ISA need? What does the pension need? It needs income from the person to be able to keep putting the funds in. Which means, very naturally, at the least, we are looking at income protection to make sure that those future plans that are being made can continue to happen on even if that person can’t work or in the other situation, such as the life insurance is no longer there.

24:49

I say at the very very minimum, when somebody’s starting a family, you really do want to be giving them a life insurance quotation as an absolute bare minimum. The last thing that we. Want to happen is to be speaking to somebody, to be setting up all these wonderful things for them to pass away, to then learn six months down the line that the person is, you know, they’re struggling to make the the bills, you know, they’re struggling to feed the kids, everything like that, and it really isn’t too big a step away from our usual workload to just do a even just a basic life insurance quotation. So I’ll start going on to other areas now. So separation. So we do have separation. We do have divorce. It might be there’s a few different things that can happen here. So it might be that we are able to split the original policy, and which can be a really really good option, especially if their health has changed since they originally set the cover up, so you would split it into two single policies. Not all insurers offer that option, and even if they do, it’s not always available on every policy that has been set up. So you just need to look at the original policy wording and see what’s available, or they can just ring up the insurer and ask them if it’s possible. You do also need to bear in mind as well that sometimes with separation divorce we can sometimes go into almost a bit of a safeguarding and vulnerable client situation. Depending upon the reasons for them being apart, it might be that there can’t be communication between the two parties. So you need to be really careful if you are changing old policies, if you are updating trusts that say like the addresses that they are now at aren’t shared while the trust documents are being sorted. It can get quite tricky, and so sometimes there is a decision just to start a new policy and start from scratch. But that does depend, as say, very much upon the client’s circumstances and if the terms are even somewhat comparable to what they were originally. We can find that during divorce settlements, that people are required to set up things like life insurance as part of the divorce settlement. And again, that’s fine. You would just go through the usual process. And obviously, in that situation, it isn’t a case of we’ve moved away from that having to show people the need for the insurance, because they already know the need, we’re not having to argue with somebody to say you need this insurance, you need to take it out. They are just like, I need it, give it to me, kind of thing, and that’s probably the main things when it comes to the separation side of things. Obviously, you really, really want to keep an eye on everything as well. But again, even if you’re on the protection side, there can be aspects of that that can be really useful in a sense, signposting backwards to our other counterparts in the industry. So maybe that person needs to speak to a pension specialist because actually, you know, there is a divorce happening, and whilst the divorce is happening, their partner has been main breadwinner, has a much more significant pension than they do, and there needs to be those discussions brought into place, and they can potentially you can introduce in someone that could help during the divorce proceedings, which is is important just for peace of mind and things like that. We have things like changing jobs, so we might gain employee benefits, which is marvelous, or we might lose them, which is obviously not so good. So a person might decide they might have come to you, or you might have done insurance for them, and they’ve now come and they’ve canceled the DDM. You’ve got in touch, and like, well, I’ve now got this through work. Well, there’s a couple of things there. One, you can just obviously you just make sure that they’re aware of the situation.

28:12

You just go, look, that’s absolutely great, but you might want to consider keeping it as as an extra, and also just in case you change jobs again, you know people do change jobs, and it doesn’t necessarily mean that they’re going to get the exact same package the next time or a better one. It might be that they don’t get one, and a lot of people, depending upon where they they are, the employee benefit might not be contractual. So that’s really important as well. If it’s a non-contractual benefit, then it could be removed, and people do need to be mindful of that. There are also things as well. So, say like somebody might suddenly start working for the NHS and go, “Oh, well, I’m covered by this and that. Now, they often are, but then if they were to say maybe contracts out of pensions with the NHS, things like that, then the employee benefits can change. I believe the last time I looked into this, so if you are a specialist in this area, forgive me if I get this wrong and things have changed. But to my knowledge, if you’re working on the NHS and you opted out of the pension scheme, you wouldn’t then have access to the death in service cover. And again, not a lot of people realize that. So it is just something to be really mindful for. At the very least, direct them to their HR officer to say, “Look, I just really want to check what I am now covered for. Um, so so obviously there’s that. Obviously, if they’ve lost, you know, they’re coming to you and said, oh, you know, I’ve just done this and I’ve changed this. I’m just wondering, you know, if it’s any influence on my mortgage. Oh no, no, no, no. But obviously, we didn’t do you life insurance before because you had your debt and service cover. We probably want to get that in place now if they obviously have lost their DIS, so it opens up that opportunity for you, which is another reason why we would say, and it’s generally seen that it’s obviously really good to do a reach out to your clients. Now there are systems that you can get and put in place, which will maybe do an annual reach out. I know firms that do them much more than annual reach out that. And you could even just have little trigger points in those emails that say, right, have you changed? Are you no longer a smoker? Like, not used tobacco for the last 12 months. You know, so we can maybe try and get some non-smoker rates. Brilliant. Have you updated your mortgage? Have you or have you changed your mortgage? Have you changed jobs? You know, so different things that could trigger these milestones that might just mean that we really need to reassess what the client has in place. It might be so. This is another one that comes into play: is that somebody is now working somewhere, they now have death in service benefit, and it’s set up in such a way that actually that death in service amount is going to be added to their pension when or when they pass away, and there’s now a certain amount of inheritance tax on the pensions. So somebody might inadvertently think, “Brilliant! I’m now working for this company, and my death in service gives me this. And they might not realize, but actually, when you combine it with your pension, you’ve just increased your family’s IHT risk, and it’s not necessarily you know silly amounts. It’s a little over a million pound, but depending upon the which is often a multiple of salary for the death in service, and then depending on how much you put in the pension, you know that can quickly suddenly come around. And so again, definitely worth just keeping an eye on things like this, things like loss of sick pay as well. I mean that’s massive, and we see it quite a bit with income protection as well when we review and cover clients. So it might be that they’ve lost sick pay, so it’s a case of rights. So we really want an income protection that deferred period to come in sooner, if possible, or maybe you know we just need to really advise them.

31:43

Look, you need to put make sure you’ve got this much savings in place just in case something like this happens until this policy kicks in, or it might be that they suddenly have more than what they had. So maybe they’re now on like a six month half. Sorry, six month full pay, six month half. Like I say, you’d usually get in quite a lot of the public sector now. That’s great, but if you’ve done an income protection policy with a 13 week deferred period, they’re paying for 13 weeks worth of cover that they can’t access because it’ll only kick in at the 26 week when it drops to half pay. So it’s really really important to just be on top of those things and have them as kind of like almost a maybe like a checklist if you’re reviewing cover to sort of say right has this changed has this changed has this changed just so that you can make sure that you don’t miss spotting something like that. We’re then coming on to the some of the other areas that tend to be the life milestones that trigger reading protection conversations. So we’ve got things like long-term financial support for loved ones. So this is potentially a vulnerable child or someone’s child who is an adult, and potentially parents. So there’s lots of talk about the sandwich generation. I am well and truly in the sandwich generation. You know, I have three children. They are 1512, and nine, and it’s quite likely, not same thing. It’s quite likely that our nine-year-old will be financially dependent upon us for for at least, well, for for the majority of his life, at least to some level. And then on the other side of things, as as most of you know, my mum passed. It’s eight months ago tomorrow, which seems to have been a lifetime ago, and also no time at all, and my dad has Parkinson’s dementia, and I’m now responsible for coordinating his care and everything. Now, what happens to somebody like me if I’m suddenly not there? So, if I suddenly die, touch what I won’t. But then, obviously, yes, Alan’s there to look after the children, but that’s a huge financial hit to the family because we work the business together. We obviously very much split evenly in terms of children and what we do with them. So he’s going to need a lot more support. But then with my dad, who’s going to step in with my dad? Well, obviously social services. But there’s going to need to be more support than that. That can well, ideally there’d be more support than that. So there’s things to consider there. If I suddenly can’t work again, there’s going to be those aspects of well, what happens if my dad needs something extra than what he’s able to afford from his current pension? What happens if we need to do something really specific with our youngest? You know, not saying it’s necessarily the case, and I don’t think it is. But once if we had suddenly send him to a very, very specific school where we had to pay certain things. We would need to do stuff like that to try and obviously make sure that he can be as successful as possible. And ultimately, none of those things have to happen because the family would just would just adapt. But if I can put something in place to make sure that they don’t have to scrape by, and to make sure that whilst obviously the loss of me would be horrific for them, that it’s the rest of it is left as easy as possible in terms of finances. Then that’s something that I would really, really want to do. So again, you’re probably looking minimum would be life insurance. You’re looking at your term. Possibly family income benefit, especially for a vulnerable child. You are going to want to be so to say. When I’m saying vulnerable child, I’m also thinking a vulnerable adult. So, so like with my son who’s nine, obviously once he’s 18, you know, I’ll need to have lasting powers attorneys in place. We’ll need to have things like that. But then that’s also I think.

35:18

But once when I’m not here, so that’s what I need to do is make sure there’s going to be funds to make sure he’s all right when I’m not here. Bless him, my eldest is already 15. He’s just like it’ll be all right. I’ll look after him. He’s already beside himself. He’s not going to be at the same at the state at the senior school, secondary school when he’s my youngest is now. He’s just like I’m not going to be there to look after him. I don’t know what’s going to happen. I’m like it’s fine. Just you bless him. He’s really taken on. He’s an amazing big brother, and my middle child is just crazy and just flying all about the place. So at least he’ll entertain the youngest when they’re in the same school together. But anyway, so then ideally we are going to want that income protection too because we do want to make sure that everything’s okay. And people might not be aware of the state benefits and the limitations. So obviously, yes, there is personal independence payments. Yes, there is state pension. There might even be private pensions. You’ve got things like continuing care. Sometimes you can get additional funds for certain medical conditions. But say, like at the moment, the last time we checked, which was earlier this year. So my dad obviously has Parkinson’s. He is end stage Parkinson’s, which is quite intense. If anybody is familiar with that, he does have dementia as well. He is still not eligible for continuing care funds, which are basically there to say, you know, this person is really ill, and they’re not going to get better, and they really do need financial support. So even with the level that he is at, he is still not eligible for it, which just shows how ill someone would need to be to be able to get that support. State benefits are not something to rely on if we can avoid it, so let’s do everything we can. Now, what I would say in terms of protection, you know, we can put things in place to sort of cover this this sort like this main area of say, like I would say for myself, that sandwich generation to make sure that whilst I would still be of working age, bringing an income, kind of trying to prepare, right? Let’s try and make sure the finances will be okay. Whilst I would still be working and X Y Z, there are sometimes longer term options that are still needed. Now, what I would say is that a lot of the long term care products are now not available to set up. You do need very specific and financial advisors to access some of these products. Potentially, people who are known as solar accredited. So that is Sierra, Oscar, Lima, Lima Alpha, and they are people who have been through very specific testing. They are financial advisors. They’ve been through very specific testing to show that they understand the rules in terms of the laws, the legislations, the benefit systems within the UK, and they know the best routes for people who do need that sort of like long term outlooks, but in terms of long term outlooks as well, what we can do to help it is make sure we’ve got the life insurance and the IP in place minimum. That’s what we want to do. We then have in terms of life milestones the things we’re not expecting, the political changes, the wonderful changing landscape in the UK and everywhere in the world, I can’t begin to address everywhere else in the world. But let’s just look at the UK. We now have, like I just said, the pensions are now included in the lifetime allowance in terms of the death in service benefit is added to that. So it’s a bit over a million pounds, and then you would start paying inheritance tax. I know there’s been discussions recently in the news about either increasing the IHT threshold or abolishing it. I think somebody was saying, but obviously we’re not there right now. But people don’t realize that they are at that level.

38:51

And if you take obviously as well just an I’m going to say an ordinary family, I’m just meaning people who earn sort of like a normal level of income, aren’t you know super high net worth or anything like that. People don’t tend to realize how quickly they go into IHT levels anyway. So we’re 325,000 pounds per person, or 650,000 pounds for a couple. Potentially an extra 175,000 pounds each for the main residence, depending upon the amount. So that can give potentially for a married couple, very specifically married couple, a million pounds before IHT is kicking in. Now somebody buys a home for 400,000 pounds. Now, well, by the time they’re passing away, let’s say they’re in their 30s, and let’s say hopefully they’re not passing away for a good 50 years at least. I mean, I’m assuming IHT levels will change by then, but let’s just say that they don’t. We are not a lot of the time preparing for that and forecasting that. And trust me, there have been so many changes recently where we are now having people come to us because of the pensions changes that are coming into place, and with the change. That happen with farmers and people are trying to get insurance when they’re in the late 80s, and at the moment that is not available in the UK. They might be in their 70s, early 80s. They can get the insurance, but the price is extortionate before you even get into looking at the disclosures. By the time they’re in the 70s and 80s, it’s very rare they don’t have disclosures that are going to affect the price, and when you look at the base price, and even with the most minimum changes from the insurers, that price is jumping up significantly. So we want to try and prep things really as young as possible, obviously to each their own. But I would be saying if you’re speaking to people in their 30s and 40s, and you think, do you know what? Actually, there’s could be well be a chance for HT at some point. Then, within the realms of what your compliance allows, I’m going to make sure I don’t get my hands slapped too much here. Potentially, even start looking at those longer conversations now. Just making them aware of what those changes could be and when they want to really start looking at those options. Um. So. plenty of different things to be looking at. Okay, and then when I’m sure there’s lots of other political changes that are coming in, and lots in terms of investments and pensions that I’m not even aware of that would certainly have extra influences as well. But essentially, if you are working in the pension space and investment space, somebody is towards a million pounds, or even when we are, because at certain points you start to lose the allowance for your primary residence as well. If you’re if you are that wealthy, so we really really want to be thinking: right, are they near this level? Assuming the market goes the way I’m thinking, is even for the next 510, years, are we getting to that level? Right. If we are, then at the very least, I should probably have a look at a very sorry, even just a basic life insurance policy to try and cover this until other things come in place. And bear in mind as well that you know, with a lot of people, there are going to be gifts plans and things like that. So it’s not necessarily that we have to go full shebang, whole of life, really expensive cover. It might be, which obviously that is generally an ideal solution. However, it might be, and I have this plenty of time where people say, right, can you do life insurance for this client of you know a couple of million for the next 20 years because we’re going to make gifts on this date, this date, this date, this date, this date. So by the time we’re there, the IHT won’t be relevant, which is wonderful, and obviously makes it so much cheaper because it’s only a risk for the insurers for 20 years.

42:23

And then the very last one I’m going to talk about, because I know I have been nattering for a bit, and I’m sure that everybody will enjoy having a bit of a break from me, is when there is something like a death of a loved one or friends, maybe a serious illness or potentially terminal illness of a loved one. Now, all the other things we’ve talked about are ideal moments for talking about protection. Now, this moment isn’t ideal because obviously this person is very emotionally drained and fatigued and scared, and they might be making a bit of a knee-jerk reaction trying to get the insurance, which is understandable, completely understandable. But we also need to make sure that the person is making the decision based upon having a really clear head as to why they’re doing this. So you know, it’s it’s clearly a situation that can bring about these conversations. Just when you’re in that situation, I would generally say that you would class them. I would personally and class them my business as a vulnerable client, depending upon I’d either class it as a big vulnerability or a little vulnerability, depending upon who it is that has passed or what the situation is that they are facing. If it’s maybe a loved one with a serious illness, and then from there we would then obviously make the decisions, make those recommendations to them, being mindful of our language and our terminology. You know, we don’t want to be. You know, if we talk about life insurance and they’ve just had their partner die, you know, we probably don’t want to be saying the word death. You know, multiple times in our recommendation. We might say pass away. I know that probably seems like a small distinction, but it does seem nicer. It’s still not going to be nice for them to hear it. We’re still probably going to want to try and word things as much as possible without having to say things exactly like that. But yeah, just being really, really careful about it. And then obviously as well, if they’ve had somebody in the company for life insurance and their partner has just been diagnosed with cancer. You don’t want to be going back with a recommendation saying, “Well, life insurance, but also, have you considered what could happen if you suddenly were diagnosed with cancer? Because you need to be mindful and sensitive about what is going on with those other conversations. So, do make sure that you are making, you know, good notes so that you’re not going to do anything which is essentially going to put your foot in it and upset the clients very likely make you feel absolutely terrible as well, but it’s it’s worth bearing in mind that they can happen. You will need to probably give them more time to process what’s being said to make those decisions. You might even when we talk about knee jerk reactions. It might be even that somebody says, “I want this doing, and I want it doing today. It’s the first conversation with them. Now, again, this is between you and your compliance, but it might be something where you say, “Well, look, we understand that that is what you want, but you know, you’re obviously going through a very difficult time. So, what I’m going to do is I’m going to give you this recommendation, and let’s speak in two days’ time or something. Now, pros and cons to that. Obviously, if something happens to them within the next two days’ time, that’s that’s not great, very unlikely. But obviously, it is potential. I’m sure it’s happened to someone somewhere. But then the positive is is that you are making sure that it’s not just a oh my god, I need to do this, and you know, just making this rush decision, and that they’re actually really mindful of of what is being done. So, some of the things to do, obviously, I’ve mentioned before about different things about as we’ve been going along, but also guaranteed insurability options. Not on all policies, so double check, see if the client has it. It can be really useful. Most people don’t realize that they have access to it. It is often available if you have increased your mortgage, if you if your salary has increased, and it’s often by a minimum amount as well.

46:12

They need it to increase by a minimum amount for to enact it, and also in both those things, in terms of a very strict time frame. So you can’t just have increased your mortgage five years ago and gone. Oh, I want to. I want to use my GIO and increase my summer short without any further medical underwriting. It needs to be within set timeframes of things happening. So the GIO is basically where the insurer will increase the summer short due to a life event without further medical underwriting, which can be really good. And again, especially if there have been health changes for that client, it can be something that’s a really positive thing to do. It’s not ideal with the GIO to so there’s a couple of things. It can be tricky with IP. So obviously, if the increase isn’t big enough, some insurers will refuse to do it. And the reason is, if I’m remembering this rightly, is that when they do the income protection GIOs, they in a sense make a new policy for that increase, and if that increase doesn’t meet their minimum premium requirements, then they will say no. That is my understanding of it. So just double check if you’re looking at that. So don’t assume it’s definitely going to be available, but also don’t assume it’s not. With the GIOs as well, it’s not ideal to do it if the new mortgage has a longer term, because if there is a longer term, it does mean that the premiums, sorry, the premiums of summer short is going to be reducing lower far more quickly than we want it to be. So ideally, if there’s a longer term, we would be wanting to replace that cover in its entirety, but again, you must look at each client’s circumstances again, changes in disclosures and things like that. We might review an insurance policy and say, “Keep it as it is. You’re doing right there. Don’t need to change it. Your circumstances have changed, but you’re absolutely sorted. Don’t worry. We might replace it again. That thing of the longer mortgage term. It might be that we had cover lasting for so long, but they’ve had another child, so they want it for longer. That’s fine. We might just top up as well. So that’s often when pre when the disclosures have changed, or maybe even it’s that you know they originally took out a policy 15 years ago, which is still quite okay and has a good price, and all we’re wanting to do is give even more insurance, and it actually works out far more cost effective just to do a top up. But overall, what’s the best thing for us to do is just to decide what. And I do apologize if you can hear that my children are just coming in from the end of the school day and beautifully singing in the background, but but yes, I think they’re gonna definitely they’re gonna hear me, and they’re probably going to hide away now in the cloakroom. But essentially, when it comes to things like this, and you are talking about resources and whether or not you can do this or not, it is up to you. It’s up to you to see what you’re going to do in this fact find and that mindset of, and it’s you know it is just that mindset of I am going to be looking at this you know this is something you are going to see the price for, and whether or not you think of it that there’s there’s different ways to look at it. One you can think of it as looking in the way of like I’m doing the best by the client by doing that, but also you can think of it based upon a complaints point of view if that’s something that encourages you more, so you get a complaint in from a client, and they say, “Well, you didn’t do income protection cover, and you say, “Well, you didn’t ask me for it, and then the the obviously the FOS financial ombudsman service goes, “Well, why you’re the advisor? Why didn’t you can do this policy? Why didn’t you make them aware of it? Well, they said, you know, they didn’t have mentioned do a baller, and the force isn’t going to go, “Oh, well, that’s a good reason. They’re going to go.

49:42

Did you do enough to know your client properly to do everything to the best of your knowledge? And if you turn around and say, “Do you know what? and I looked at this situation and I and I realized and I and I put my hand on my hat. I’m really good at doing this, but I’m not good at protection. So yes, I didn’t do the income protection, but I. Posted them to this firm over here who do do it, and it was their role to then give that advice to the client. And I have an introducer agreement with them, that gives you an extra backing to your compliance files to say I have done the best by this client. This isn’t my area, or this isn’t my resource time because I am at limit, and there’s nothing wrong to say that you’re at limit as well. Everybody does have a limit, and just say it’s out. It’s it’s just something I can’t do, so I brought somebody else in. But it’s not really when you are getting externally audited or things like that. If you just say, “Well, I ran out of time, that’s not really going to be something that’s going to be looked on favorably. So anyway, lots of food for thought there for you. Thank you for listening, everybody. As always, it’s been a pleasure to have you on. Now, something just to be mindful of is that there has been that announcement from the FCA that they no longer require you to have IDD CPD for protection insurances, which is great, isn’t it? It’s just another thing to say that protection insurance doesn’t need to have as much attention as the other area of finances, and it’s clearly something very, very easy to do, and doesn’t need any specific training on. Which is, I’m sure we all have our thoughts on that. So, whilst those of you have been using this potentially to get your IDD CPD, I hope you do still use it. I hope you do still find it useful. No matter what, the client’s needs are still there, even if we don’t need to officially have that CPD in place for the time being. I will still be carrying on putting that CPD, the structure CPD, in place for you. So please do do grab it. I hope you still find it a very useful resource. Next time, I’m going to have Jo Miller back with me, and she’s going to be coming back to give us insights into the IP industry and what has been happening with the Income Protection Task Force. If you’d like to, you can listen to the rest of the episodes on all major podcast platforms and on the website www.practical-protection.co.uk, and please do remember on that website you can get those CPD certificates if you’d like them. Thank you very much, everybody, and I will speak to you soon. Bye.

Transcript Disclaimer:

Episodes of the Practical Protection Podcast include a transcript of the episode’s audio. The text is the output of AI based transcribing from an audio recording. Although the transcription is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors and should not be treated as an authoritative record.

We often discuss health and medical conditions in relation to protection insurance and underwriting, always consult with a healthcare professional if you are concerned about any medical conditions and symptoms we have covered in any episode.