Scottish Provident has released a report based upon survey responses from Independent Financial Advisors. The survey was conducted with the primary purpose of determining what the reasons are behind clients seeking protection insurance.
The prevailing theme of all responses indicated that almost all clients were seeking insurance because of major life changes, such as purchasing a home or property, or having children.
The Survey and Results
A report released recently by Scottish Provident, called the Financial Safety Net survey, indicated that 92% of IFAs, also known as Independent Financial Advisers, said that purchasing property was the primary reason that clients seek a new protection policy. These could be life insurance, income or payment protection, critical illness protection and/or mortgage protection.
The report was compiled using responses from 900 IFAs and it further indicated that the second most common trigger, at 80%, for client insistence on new policies providing protection was because they have had new additions to the family. Further, 3 out of 5 IFAs indicated that clients simply want peace of mind concerning their financial futures.
Out of the IFAs surveyed, around 25 percent responded by saying that their client had inquired about job loss protection and that only 1 out of 16 said that prior financial difficulties was one of the reasons why their clients sought products that offered protection. The report also indicated that, of the 900 IFAs surveyed, 3 out of 4 of them state that the most common policy inquired about, without being prompted, was life insurance (including life insurance for mortgage protection).
Scottish Provident’s head of marketing, Susan Barclay, said that their research confirmed that buying a home, having children or experiencing other huge life changes are the primary catalysts behind IFAs prompting of clients to take out protection products. She further stated that consumers will often need protection when they least expect it and that preparation for the future is vital regardless of a client’s current situation.
Popular Protection Policies
The most common insurances available, and sought after, are life insurance, income protection, payment protection, critical illness protection and mortgage protection plans.
- Life insurance pays out a specific amount at death to take care of not just final expenses but funeral and mortgage expenses as well.
- Income protection replaces a part of a policyholder’s income, usually 50 per cent to 65 per cent, due to an illness or disability which prevents the policyholder from working for an extended period of time. These plans can continue to provide regular payments until the policyholder can return to work or until they reach retirement.
- Payment protection will pay out a designated amount of money to cover monthly repayments on credit cards, loans, mortgages or other qualifying claims due to becoming redundant at work or because of a sickness or accident.
- Critical illness protection is a long-term policy which is designed to pay out a lump sum amount due to a diagnosis of certain covered debilitating or life-threatening conditions.
- Mortgage protection is designed to cover a home loan. Common plans include mortgage life insurance and mortgage payment protection insurance (MPPI).