Tim Bell is a Partner and Financial Planner at TBA Financial, located in Bentleigh, Victoria. TBA Financial believes in getting their clients’ ‘financial house’ in order, and then keeping it that way forever.

What trends are you seeing in income protection?
One of the main trends I’m seeing – not only from clients, but also from friends and family – is the buzz that direct insurers have been making of late. Most of us have seen the television commercials, promoting “guaranteed acceptance without medical checks or underwriting”. It seems too good to be true, and that’s because it is. So I now promote underwriting as a positive.

When I recommend a personal insurance policy of any kind, I’m not selling a piece of paper, I’m assuring my clients that when it comes to claim time, their claim will almost certainly be honoured. When making a personal insurance claim, it’s not the time to be answering questions. I explain that underwriting will ensure the right information is captured up-front and that  there is a higher likelihood that their claim will be paid. Their premiums can also be cheaper because the insurer isn’t quoting a policy based on assumptions and averages.

So how do you educate your clients on the value of underwriting?
One of the first things that comes to mind is emphasising the value of pre-assessment, which has become even more streamlined online. I often receive email responses to any pre-assessment queries within 24 hours. What they essentially do early in the discussion is manage my clients’ expectations.

I had a client who was applying for income protection. We’d discussed his health broadly and nothing out of the ordinary was mentioned, so we conducted a detailed insurance needs analysis. Towards the end of the meeting he mentioned he takes medication for depression. He thought this was normal and was not happy with the idea of having a mental health exclusion. If I had done the pre-assessment before the analysis I would have been able to manage his expectations better and possibly saved time for both of us.

I also promote the benefits of telephone-based personal statements to clients. These can be tough conversations to have face-to-face with clients and sadly, I’ve seen clients in tears. Also, as an adviser, it can be difficult to capture the right amount and type of relevant information around specific medical conditions. On the other hand, when clients speak to a professional on the phone, there’s anonymity, and the interviewer captures the right information the first time, making it easier and faster. 

There’s comfort in using these two tools. It helps my clients realise that the process  is thorough, and helps them  understand that because all the relevant information is disclosed up-front, they won’t be caught out or penalised down the track. 

Inside or outside of super? 
I usually recommend income protection outside of super as retail policies are generally better featured, with options for agreed values, additional benefits such as rehabilitation costs covered and a greater choice of waiting and benefit periods. 

Having said that, I saw a client the other day who owns a manufacturing business. As a small business owner his priority is on paying the mortgage on the factory and freeing up his cash flow for other expenses. He wasn’t too concerned about agreed values, however he did want a safety net, just in case. So in this instance, as there was sufficient TPD cover within his super, taking out TSC was a more appropriate recommendation for him.

What common client objections have you heard?
The first and most important step we take with our clients is to educate them. This doesn’t need to be a long and drawn-out process; it’s a matter of helping your client understand the types of personal cover and the why’s, when’s and how’s. Write them on a whiteboard and walk them through it. This is a great way to remove the confusion and generality between terms. Then, you’ll see people are much more willing to have the discussion. 

The most common objection I see is “I’m young, fit and healthy; why would I need it?” That’s simple we always remind clients that now is the perfect time to get insurance!

The other big concern is the old misconception that insurers never pay claims. So this is where we focus on the beauty of the pre-assessment and underwriting process, and the significance of non-disclosure in the rejection of claims. Let your clients know that the time and care they take in their financial and medical assessment will be time and worry saved should they need to claim in the future.