PROTECTION INSIGHT issue 2

ISSUE 2

INSIDE THIS ISSUE: ROYAL LONDON

Three new opportunities in the protection market – they’re not what you think! CANADA LIFE A simpler underwriting journey LV= Recommend IP to even

more clients THE EXETER

Real Life. Life cover for hard to insure clients Plus much more...

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Wherever it lands, your client is better protected with us.

If your client gets divorced...

...our dual life approach means both parties can walk away with their cover still in place. Joint life policies mean that protection is yet another thing to sort out on divorce, and never top of the priority list. Dual life means life policies are separate from day one. Spin the Wheel of Life and discover how our policies protect your client no matter what the future holds at: adviser.guardian1821.co.uk/wheeloflife

Guardian Financial Services Limited is an appointed representative of Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Registered office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. Registration number 110002. Guardian Financial Services Limited is registered in England and Wales under number 11115769. Registered office: 11 Strand, London WC2N 5HR.

PROTECTION INSIGHT - 3

Welcome to the second edition of our protection special feature, PROTECTION INSIGHT Following the IDD which came into effect on 1st October 2018, it’s worth just noting that by the end of March, we will be over half way through the first CPD year for IDD, so you should have logged about 8 ¾ hours out of your required 15 hours. Remember, reading this publication can count towards your unstructured CPD hours. Your 15 hours can be structured or unstructured and it’s also useful to note that all our Tenet events now specify the IDD CPD hours within the agenda. Our 2019 events programme is now available to view on the extranet, giving you an ideal opportunity to map out your CPD requirements for the year. IN THIS ISSUE Royal London highlight three new opportunities in the protection market. On the surface you could be forgiven for thinking there isn’t anything new, that protection is still generally being overlooked and undervalued. But it’s not all doom and gloom and there’s more going on than figures suggest. Beyond these statistics, there’s some proof of a shift in attitude from some consumers, which could provide advisers with some positive news and unexpected opportunities. And that’s mainly down to how society is changing. Vitality introduce their new all-in-one VitalityLife Mortgage Plan in their article “How drinking (a little) less coffee can be good for your financial health” which emphasises that for less than the price of a daily cappuccino, protecting your clients, their home and their family’s future is now quick, easy and even more affordable. LV= are advising advisers to recommend income protection to even more clients. In their latest Income Roulette research they examined financial resilience across three key segments of consumers in the UK. The findings revealed that less than half (44%) surveyed have the recommended Money Advice Service guideline of 3 months of outgoings in savings. With accident and illness looming over us all, it’s important that clients understand the importance of protection and bridge the income gap if they were unable to work. Read more on page 7. Plus Canada Life outline a simpler underwriting journey for getting life insurance and Life insurance plus critical illness cover on page 6, and Aviva discuss why relevant life insurance could be ideal for business-owner clients on page 11. We hope you find this magazine an informative read, keeping you up to date with the protection market.

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Three new opportunities in the protection market - they’re not what you think!

What’s the news in protection? On the surface you could be forgiven for thinking there isn’t anything new, that protection is still generally being overlooked and undervalued. Figures from our State of the Protection Nation report show that protection take- up is still worryingly low - just 35% of people have life insurance, 12% have critical illness cover and 9% have income protection. 1 And while more people with a mortgage have taken out protection, the numbers are still nowhere near where they should be - 40% have no life cover, 71% have no critical illness cover and 81% have no income protection. 1 And yet many consumers recognise that it would be beneficial to have some cover in place. 1 There are a lot of people who don’t have protection who probably should. Especially if they’re already talking to a financial adviser. But converting those thoughts into action is still proving difficult. So it’s hardly surprising that when we asked advisers what they thought - 72% agreed that the protection gap is increasing. 2 Particularly, it seems, when it comes to income protection which nine in 10 financial advisers believe is hugely undersold. And they put that down to a number of reasons such as a lack of

awareness among clients, the products being too expensive or an overreliance on government support. 2 But it’s not all doom and gloom and there’s more going on than these figures suggest. Beyond these statistics, there’s some proof of a shift in attitude from some consumers, which could provide advisers with some positive news and unexpected opportunities. And that’s mainly down to how society is changing. Take the much talked about ‘gig economy’ The gig economy – the popularity of short-term contracts or freelance work, as opposed to permanent jobs – has been criticised for contributing to low pay, insecurity, and poor working conditions. But for many people it provides an opportunity to structure their work flexibly around their lives to suit them. And it’s a booming economy. The UK is now home to an estimated five million self-employed people – 15% of all UK employees. 3 We’re not just talking about Uber drivers and Deliveroo couriers. In fact just under 30% of gig workers are professionals working in the accounting or legal industries. 4 The gig economy worker profile also isn’t what you’d think. Since 2001, the number of self-employed workers aged 65 and above has nearly tripled and it would appear young people are keen to become their own bosses - with the number of self-employed workers aged 16 - 24 nearly doubling over the same period. 3 The more people are inclined to work on a self-employed basis, without employer benefits like occupational sick pay, the more they need protection.

The good news is that the possibilities within this growing market are being recognised by advisers - 28% agreed that the gig economy provides them with a new opportunity. 2 The youth of today Millennials often get talked about as a breed of consumer that’s very different to the types of clients advisers are used to dealing with. Of course every generation has its own trends and behaviours. We’re a product of our environments after all. But are the youth of today altogether different? 74% of financial advisers believe that young consumers are addressing their protection needs too late, and 43% say they are struggling to attract clients under 35. 2 Unfortunately, younger people don’t recognise that they could get cheaper cover if they had the protection conversation earlier. And yet almost three quarters of 18-34 year olds who bought cover through an adviser say they have an ongoing relationship with them. That’s compared to around 45% of 35-54 year olds and those aged 55 or over. 1 Clearly there’s a huge number of younger clients who are looking for guidance, which goes against the theory that they’re happy to do everything themselves online. And if advisers could get them through the door, they could have a loyal client for life. The problem of increased life expectancy Average life expectancy is going up, partly due to better health care, which means we’re able to survive diseases that previously killed us. But that also means we’re now living longer with critical or chronic illnesses, which naturally puts a strain on our survival.

PROTECTION INSIGHT - 5

Amanda Docherty Marketing Manager

This isn’t something many people think about. 71% of people with a mortgage have no protection in place if they were diagnosed with a critical illness. 1 Unless they’ve built up substantial savings, how would these people expect to replace their income after a cancer diagnosis, heart attack or stroke? It’s clear we need to work harder to make people realise not only the benefits of protection, but the long-term outcome for their family and themselves if they become seriously ill. Clearly the old objections remain – people see protection as too expensive or think it will ‘never happen to them’. But if we look closer at the way society is changing, we can see there are more opportunities for the protection conversation than there used to be – this time it’s a question of looking more closely at client demographics to find the opportunity. Sources: 1 State of the Protection nation, Royal London, May 2018 2 Royal London adviser polling, November 2018 3 Trends in self-employment in the UK, www.ons.gov.uk, February 2018 4 Truth about the gig economy: our younger generation will demand a flexible future, www.fenews.co.uk, August 2018

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A simpler underwriting journey Getting Life Insurance and Life Insurance plus Critical Illness cover with Canada Life is a simple process.

Over 80% of our customers get an online decision in as little as 20 minutes. This includes customers with medical or lifestyle disclosures to make. In fact, over 27% of online decisions are for cover at non-standard rates. Our underwriters are focussed on getting the remaining 20% on risk with ease: • The average time to assess an application is 24 hours • When further evidence is required, our average turnaround time to obtain the information and make a decision is under five days

Here’s a selection of common disclosures which we can usually offer immediate terms for, without asking for medical evidence:

• Controlled diabetes – type 1 and 2 • Height/weight up to a body mass index of 42 • Mental health • Raised blood pressure & cholesterol • Sleep Apnoea

If you’d like to apply for an agency, or log into our quotes extranet, please email [email protected] where one of our team will be happy to help.

Jon Ford Director of Individual Protection

PROTECTION INSIGHT - 7

Recommend IP to even more clients

Graham Taylor LV= National Account Manager

In our latest Income Roulette research we examined financial resilience across three key segments of consumers in the UK. The findings revealed that less than half (44%) surveyed have the recommended Money Advice Service guideline of 3 months of outgoings in savings. With accident and illness looming over us all, it’s important that clients understand the importance of protection and bridge the income gap if they were unable to work. Income protection can help as it provides a guaranteed income if a client is unable to work due to injury or illness. However, our research also showed that only 14% have income protection in place, which is why your advice is so important. To help you recommend income protection to more clients, we’ve extended our income protection proposition. The changes mean more benefits, as well as wider eligibility! LV= Income Protection – now extended! Parent and child cover – at no additional cost: Children are the most important thing in your client’s life… so, what would they do if their child was diagnosed with a serious illness? To support your clients if this were to happen, we’ve added parent

and child cover to our income protection product. The extended cover is there to provide a lump sum payment of up to 6 times the monthly amount of cover to your client should their child suffer from one of the listed illnesses or undergo one of the listed operations, or medical procedures. The max payment is £25,000 and is limited to one payment per child per policy. What’s more, your client doesn’t need to be unable to work to claim this benefit on their Income Protection policy and if your client has Critical Illness cover with us their children will be covered under both the IP and the CI policy, meaning your client can Our income protection cover now also includes: NHS Sick Pay Guarantees - Now include dentists as well as doctors and surgeons whose sick pay arrangements match the NHS sick pay arrangements, regardless of being employed by the NHS . Rehab support services – These valuable services are now available during the waiting period, helping clients realise the true value of their income protection policy, with support such as physiotherapy, psychological support, and return to work claim on both policies . That’s not all…

services. The payments may be limited to a maximum of 3 times their monthly amount of cover. Extended maximum cover – Now at £250,000 pa for level cover and £175k for inflation linked cover; opening up more opportunities for your higher earners. Reviewed the way self-employed receive their income – A simplified process for self-employed clients; we now only look at last 12 month’s income to assess their claim. Don’t forget our income protection also includes: LV= Doctor Services, Fracture Cover, Death Benefit, Unemployment Payment Holiday, and LV= Member Benefits. Due to the challenges and uncertainties we face today, having an income protection policy that pays can help your clients to be better prepared if they were to lose an income. To find out more about LV= Income Protection, contact your usual LV= Account Manager or visit LV.com/extendedIP

Only bricks and mortality?

Our newMortgage Plan protects more than just your clients’ lives. The Mortgage Plan is now available with Serious Illness Cover Protector, which covers more conditions than any other insurer* and pays out at 100% for 77 of the most severe conditions.

And with our Healthy Living Programme, your clients can be rewarded from day one.

One quick and easy application means your client can be covered in minutes.

Change the conversation with our new Mortgage Plan.

POSITIVELY DIFFERENT LIFE INSURANCE

adviser.vitality.co.uk/mortgage

T&Cs apply. VitalityLife is a trading name of Vitality Corporate Services Limited and is authorised and regulated by the Financial Conduct Authority. *Defaqto verified Competitor Comparisons, Sep 2018.

PROTECTION INSIGHT - 9

How drinking (a little) less coffee can be good for your financial health

For less than the price of your daily cappuccino 1 , protecting yourself, your home and your family’s future is now quick, easy and even more affordable.

Therefore, having gone to such extreme efforts, it’s frankly mind-boggling how few first-time buyers in particular take out any form of mortgage protection. Why work so hard for so long to own your own home, only to have it taken away in a relative flash, just because of a single stroke of bad luck? It could be that the need for mortgage cover is somewhat lost in the highly stressful buying process – arranging the mortgage, solicitors, moving and the rest. It could be it’s not considered necessary, but then no-one bats an eyelid at insuring buildings and contents, mobile phones or even pets, so why not your mortgage? What it certainly can’t be for is reasons of cost or simplicity, as even the best mortgage protection costs less than a daily caffeine hit and takes just five minutes to arrange. Take the example of the new VitalityLife Mortgage Plan. It always includes life cover. You can choose to add either Serious Illness Cover – which protects you against 145 different serious conditions – or Income Protection – to give you an income if you can’t work due to accident or illness – or both. It’s also very quick to arrange: with just 5 medical questions, you could be fully protected in minutes. And it’s eminently affordable: £250,000 of comprehensive protection for a 30-year mortgage costs just £52.53 a month – or around £1.75 a day.

So how would that work for, let’s say, Dave (35) and Katy (32) with a £250,000 five-year fixed-rate mortgage costing just under £800 a month 5 ? With our mortgage plan, they could get life cover on a decreasing basis to pay off the mortgage, £25,000 worth of serious illness cover to provide a lump sum in the event of a serious illness, and income protection of £800 per month on a three-month deferred period. All in one plan. All for £1.75 a day. As the insurer that rewards its members for healthy habits, the plan also includes access to a whole range of deals and discounts that could save hundreds of pounds a year. These include up to 40% off monthly gym membership, which on its own could almost save the equivalent cost of the entire plan; a weekly handcrafted drink at Starbucks; a fortnightly cinema ticket at Cineworld 1 Based on cost of Starbucks Cappuccino (Grande) of £2.60 https://uk.menuwithprice.com/starbucks-menu/ Jan 2019. Premiums are charged on a monthly basis 2 https://www.bbc.co.uk/news/business-42565427 Jan 2018 3 https://www.theguardian.com/money/2018/jan/25/uk- workers-chronically-broke-study-economic-insecurity Jan 2018 4 Based on a male 30 year old, non-smoker https:// vitalityriskcalculator.co.uk/ 5 Mortgage rate, Nationwide, 5 year fixed, 80% LTV, £250,000 2.54% 6 T&C apply. Visit https://adviser.vitality.co.uk/rewards/ partners/ for more information or Vue; a monthly Amazon Prime membership and many more 6 .

Andy Philo Director of Strategic Partnerships and Employed Distribution

Despite rising prices and largely stagnant incomes over the last decade, home ownership remains the cornerstone on which millions of people’s lives are built. Often making extraordinary financial efforts simply to get on the property ladder, it now takes over eight years for the average UK first-time buyer to save a 20% deposit towards their own home 2 . For many, the precarious long-term financial balancing act in search of the property- owning dream doesn’t end there. Assuming you do buy a home, 43% of workers don’t have anyone in their household they could depend on to support them financially in the event of hardship 3 , such as an illness or injury. As if that wasn’t enough, there’s also a 57% chance that the average 30 year old mortgage holder will need to take at least a month off work before the age of 65 during the loan term for the same reasons 4 .

For the cost of a daily coffee, it seems a small price to pay, when it comes to protecting what’s probably your biggest investment in life – not to mention your family’s future. Find out more about the new all-in-one VitalityLife Mortgage Plan at adviser.vitality.co.uk/ mortgage

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REAL LIFE. Life cover for hard to insure clients

Discover Real Life - making protection more accessible

At The Exeter, we’re committed to making protection more accessible, even to clients living with a serious medical condition. Our life cover has now been extended to reach those hard to reach clients, who may have been declined cover elsewhere. Together, our two plans Managed Life and Real Life, can surpass expectations. We don’t have to persuade you, but we know how challenging it can be to persuade your clients of the importance of protection insurance. Despite what people like to think, ill health and bereavement can happen when we least expect it. Our report ‘ An unhealthy situation ’, highlighted the scale of underinsurance amongst people with health conditions that often increase their need for financial protection. The report shone a light on a growing problem; that many of those who have perhaps the greatest need for protection, are the least likely to have adequate, or in some cases any, cover in place. We surveyed 2,000 people across the UK and found that among cancer sufferers, two thirds didn’t have a single protection product. The situation was similar for sufferers of type 2 diabetes, those with high BMI or heart conditions. Commenting on the findings, Steve Bryan, Director of Distribution & Marketing at The Exeter said: “With an ageing population and the diagnosis of conditions like diabetes and cancer on the rise, it is worrying to see this research lay bare the scale of what we know is a growing problem.” “1 in 2 of us will get cancer in our lifetime, whilst there are currently 7 million people in the UK suffering from a heart disease, two conditions which are likely to make protection much more difficult for people to access. Our research indicates that over 65% of people who suffer either condition, have no protection in place at all.”

Real Life is life cover for hard to insure clients, who have suffered either serious or multiple health conditions; they may have even been declined life cover by another insurer. You know it is vital for your clients to have adequate life cover in place. So, discover how Real Life can open up a whole new market – to date, we’ve offered cover to over 95% of all applicants. Focusing on your clients’ health We’re living longer, but suffering longer periods of ill health. With Real Life, we may be able to cover people living with a serious medical condition, such as:

• Cancer • Type 1 diabetes • A BMI above 55 • Complex heart conditions • Multiple conditions.

Don’t miss out on an opportunity The report also showed that more than half of advisers say it’s too difficult to get protection for clients with a medical condition, with one in ten usually referring them to a specialist adviser firm. We are making protection insurance more accessible, and continue to bring quality affordable life cover to those who need it the most. You know it is vital for your clients to have adequate life cover in place – help them by speaking to our sales team on 0300 123 3207 or contact us on [email protected].

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Mark Cracknell Head of Distribution, Aviva

Why relevant life insurance could be ideal for business-owner clients

However, many intermediaries could consider relevant life insurance as a way of providing tax-efficient cover for their clients’ employees as part of a holistic protection package. Relevant life insurance could result in tax savings for the employer when compared to the cost of funding a personal life insurance policy for an employee. Based on a monthly premium of £100, an employer providing a relevant life policy for an employee paying the higher rate of tax could save £77.92 in taxes.* This presents a saving of 49% for an employer compared to funding a personal life insurance policy. Other benefits to consider Besides the benefits outlined above, there are other reasons to recommend relevant life to business-owner clients that advisers may not have considered. Unlike group protection policies, any pay-out from a relevant life policy doesn’t count towards the employee’s pension lifetime allowance – and there’s usually no income or capital gains tax to pay on it either. What’s more, our relevant life policy gives the option to boost the protection by adding employee significant

illness cover. This pays out if the employee needs to retire from their role after suffering one of the serious illnesses covered and could prove an invaluable benefit without having an impact on the pension lifetime allowance. Entrepreneurs at risk Today, in our nation of business owners, it’s still the case that too many people don’t have sufficient financial protection. Most advisers will have clients who run their own businesses, so it’s worth considering this client base and whether all their financial planning needs have been met. If not, it’s time to start the conversation. 1. Contains public sector information licensed under the Open Government Licence v3.0. Companies House >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12

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