Help to protect clients in both life and death

Jeff Woods is campaigns and propositions director at Sesame Bankhall Group

There are many learning points emanating from the coronavirus pandemic and one of these is how the crisis has highlighted people’s lack of financial resilience.

This is a huge concern for large swathes of our population, but it is also something that the advice profession can play a role in improving, by ensuring that customers and their families still have an income and can maintain their way of life should death or serious illness strike.

However, one thing that continually frustrates me is that whilst we have finally seen some improvements in sales of income protection cover, particularly the budget version, the same cannot be said for family income benefit. This is despite the fact that in my mind the two are connected.

For customers with dependants, the combination of income protection alongside family income benefit can deliver a powerful solution that provides income replacement cover in both life and death.

This will sound like a familiar debate for some people. However, the difference now is the greater appreciation many people have about their financial fragility, which means that customers are likely to be more receptive to the protection conversation.

From an adviser perspective, I believe one of the most important things you can do is to replace a person’s income. It’s one of the most important conversations for an adviser to have, and it will help to ensure that the family continues to have an income should the main breadwinner die.

However, we have to ask ourselves how much easier we can really make family income benefit cover to take out, given the advances already made in rates and improved underwriting over recent years?

It comes back to the mindset of advisers and customers. We need to shift the focus away from just clearing debt or giving people a lump sum. The focus instead needs to be on the benefit of providing an income for customers when they can’t work, and also for their family if they die.

So what steps do we need to take to get advisers to recommend it more often? Setting out the facts will help to improve people’s understanding. If, for example, you have £3,000 of essential outgoings each month then you need to ensure your family continues to receive £3,000 regular income if you die.

Income protection alongside family income benefit is a simple enough concept for both the adviser and the customer to understand. One protects in life and the other in death.

Family income benefit can be a valuable and cost effective bolt on to income protection, which is available right now and I urge advisers to consider and utilise it more.