Is your client’s income protection what it should be?

For working individuals, self-employed or salaried, Income Protection is a must. Designed to pay the Life Insured’s income if they suffer a disability and cannot work due to illness or injury, it is important that individuals have disability cover that responds to their needs. When it comes to Income Protection, have you asked your clients the following critical questions? 1. How much of your income do you need to cover? Most people need their full income to sustain their daily lifestyle. When a client chooses to cover only a portion of their income, they need to remember that that cover needs to be able to pay for the daily expenses that are currently paid for by their income. While many Income Protection products offer cover for 75% of the Life Insured’s income, FMI offers cover for 100% because we know that most people need their full income to survive on a daily basis. 2. The same thinking applied to your premium amount. Do you think that a cheaper premium is really worth it? A cheaper premium most often means less cover so it’s important to ensure your client understands their policy benefits and what will be covered in the case of a disability. FMI’s BPE can be tailored to cover the income amount your client needs, their business expenses, and offers optional benefits such as freeze and continuation options. 3. When you hear the word ‘disability’, do you only think of a permanent event? For example, being paralysed for life? While many people believe that ‘disability’ means a life-altering event from which they will never recover, the truth is quite the opposite. Research shows temporary disability is more common than permanent disability and can have devastating financial consequences. At FMI, we believe in holistic income protection - a combination of temporary (up to 24 months’ cover) and permanent cover (long temporary and to retirement age) to ensure that your client is properly covered for both scenarios. 4. Do you understand the difference between monthly payments and a once-off lump sum payment? Many clients are reassured by the thought of what they perceive to be a large pay-out amount and go on to choose a capital disability benefit for permanent disability. However, this does not take into account both the short-term stress of efficiently managing that sudden capital pay-out and the long-term implications for the client’s financial well-being. In many cases, a combination of monthly pay-outs and a lump sum can be the best option. 5. Have you told the whole truth? While this is a difficult question to ask your client, it is an important one. Just like any other insurance policy, applicants will have to answer questions on their family and medical history, including their smoking status. This helps the insurer to work out the costs of the monthly premiums. If the insurer finds out that the applicant was lying, they can refuse to pay out and will not refund any premiums. Warn your client that it is best to be honest upfront, secure in the knowledge that when they make a valid claim, they can be assured of a fair assessment. At FMI, we complete underwriting upfront to ensure that there are no nasty surprises at claim stage. 6. If you are an existing client, when was the last time you reviewed your policy? Life changes all the time and so do your client’s cover needs. It is important to review their policies on at least an annual basis to make sure that they have adequate cover in place. For example, FMI’s Annual Review benefit allows to the Life Insured to increase their cover by 20% without medical underwriting. At FMI, we work with independent financial advisers such as yourself because we know you give your clients the best advice. And, we believe in supporting you through every stage of the policy process, from application to claim. Have a topic you’d like to see covered in our newsletter? Let us know.