May 2021 | Protection

Protecting the sandwich generation

Ross Liston is managing director, distribution of Sesame Bankhall Group

Estimates suggest there are at least one million Britons who are financially responsible for both their younger and older family members.

The likelihood is that this so-called ‘sandwich generation’ is only going to grow further as couples leave it later to have children and the older generation lives longer.

Having this dual financial responsibility makes it even more important for people to consider how their loved ones would cope if they were to become seriously ill or die.

There’s a wide range of protection insurance options available to help clients and give them the peace of mind of knowing their loved ones will be looked after – the question is whether advisers are giving this enough focus in their regular conversations?

So, what are some of the ways that advisers can incorporate protection into their customer conversations?

Here are some suggestions:

1. Tackle any misconceptions around cost and promote the value of protecting assets, income, and health as the foundation for any financial plan. Help clients understand how protection fits into the bigger picture of their financial wellbeing.

2. Remind customers that age is just a number. Lots of people feel that becoming seriously ill isn’t something that will happen to them. However, the reality is that long-term illness can strike at any age, and there’s plenty of statistics available with which to back this up.

3. Statistics can also be helpful in demonstrating the high percentage of claims that are paid each year, which is a useful tool in dispelling any negative perceptions a client might have.

4. Setting realistic underwriting expectations is important, as one of the common reasons clients do not go through with an income protection application is when an insurer raises the quoted premium due to a health or lifestyle factor, which the client was not expecting.

5. Consider all the available options. Whilst income protection policies offer relatively cheap premiums for those who are young and in good health, a comprehensive long-term product isn’t going to be within every client’s budget. However, product innovation means a solution is almost always available, so what’s the next best thing?

6. Protection sales have traditionally focused on people who own their home, but data shows that a fifth of the 27 million households in the UK live in rental properties. There’s been a steady rise in the number of professionals with families living in rented accommodation, so it’s important to take a broad view.

The impact of COVID-19, combined with changing population trends – such as interdependent family units spanning several generations – are leading to changing consumer needs.

This is where the role of professional advice becomes more important than ever. It’s an opportunity for financial advisers to help restore protection to its rightful position as the foundation of sound financial planning.