A pride in protection
John Phillips is group operations director at Just Mortgages and Spicerhaart
In the US, people are proud if they have a high amount insured as it means they are looking after themselves and their families and are not a burden on the state.
Of course, it has no National Health Service and little welfare state to talk of.
However, children at a young age are taught the importance of protecting themselves and a pride is instilled in those who do.
This makes the financial adviser’s life very easy where selling assurance is concerned, as it is often bought as opposed to sold.
However, in the UK it is in the national psyche that the state will look after you.
Everyone who has ever tried to persuade a client of the need for protection will be aware, all protection products to UK consumers definitely need to be sold, with most people unaware of how little they will receive from the state should they fall on hard times.
I am worried that the number of protection sales will drop further if the process of getting a mortgage becomes even more remote.
The nation is massively under-insured; the consequences to the national purse of this dropping further could be significant.
The consequences to those who find out far too late, the real cost of not having your own insurance in this country will be yet greater still.
Most brokers will agree that the most effective way to make that sale is face-to-face.
A computer will not pick up the subtleties of a change in someone’s facial expressions when asked a certain question that would lead an adviser to go down a different channel of questioning.
Similarly, how will a computer be able to have the difficult conversations that lead to understanding their need for a protection policy? The answer seems to be that it clearly won’t.
Something needs to change.
One option is to tie life assurance to a mortgage sale once again as it was about 15 years ago.
At that time if someone took out a mortgage they were obliged to take out a life assurance policy covering their mortgage.
At least it prevented a family being thrown out of their home following the death of the bread winner.
It should also be obligatory for every adviser to at least have the conversation about protection, so the client is aware of what is available and what the implications will be of not being insured.
I cannot understand why this is an issue yet to be taken up by both the government and the FCA.
The average US citizen would find our attitude to insurance and protection as incomprehensible as most people here would find theirs.
As the national debt shows no sign of being wiped out any time soon, and personal indebtedness continues to rise, the answer needs to be a shift towards the American system with children learning at an early age that insurance is the corner stone to financial security.