When they are considering personal insurance we generally find from our previous experience that clients come to us with one of three different proposals.
The first is based on what we, as Insurance Advisers, would recommend given the current situation of the client. Recommendations are based on what the Adviser believes could be potential risks to the client and what would be required in order to avoid financial hardship adding to their woes if the worst should happen.
Together the client and adviser will come up with a proposal that will not only protect the client but realistically also protect the adviser. If a client has to make an insurance claim they will never ever say to their Adviser – you made me take out too much insurance. However if a client has to make a claim they can well go back to their Adviser and say – you sold me too little cover for my needs.
The second way that a client will come to us is to ask for a specific product. They want life insurance or they want mortgage protection insurance and can we arrange it and how much will it cost. The adviser needs to establish what the client currently has in place and what the end goal is in terms of financial needs should a claim be made. They have to advise the client if they think that they are adequately covered and point out where any shortfalls may be. It is then up to the client to decide whether to take the cover recommended or to make any changes to what they have in place.
The third and least common way is for a client to say, “This is my budget to spend on insurance – what can I get for it?” Insurance can be oversold – make no bones about it. We’ve even seen Insurance sold as a “wealth creation” strategy – if you buy $1,000,000 insurance on your husband you could be a millionaire when he dies. This is not what insurance is intended for and certainly not how it should be sold. Insurance is to protect you and your family’s financial position should the worst happen.
As an adviser one needs to take a holistic approach when recommending insurance. You can’t just suggest products and levels of cover that will cover your backside if the worst does happen. Clients certainly need to know what they should have and what’s available but a good adviser also needs to understand and work within the budgetary constraints that most of us have. They also need to identify the highest priority that each individual may have. This priority is often based on personal experience. If a client has had a close family friend die of breast cancer then in all likelihood they are going to want to ensure that whatever insurance they arrange includes cover in the event of this happening to them.
The important thing to remember is that no two people are the same. We all have unique circumstances, priorities and restrictions and a good adviser is able to offer a comprehensive plan and good advice to fit all 3 areas. Our situations and priorities can, and often do, change at different stages of our lives. What suits you now may not suit you in the future. It is for this very reason that you need to review your insurance plan with your adviser regularly. We recommend that this should preferably be done annually, as you won’t ever want to find yourself in the position of paying too much, or for a product that at claim time won’t fully cover your requirements.
Insurance is often one of those things we overlook or choose to ignore. Because it doesn’t necessarily advance our financial goals or enhance our life we can sometimes place little value on it. But it can protect the ones we love the most, from the worst things that we could imagine.
