This is how we do it: Selling more income protection

Alan Lakey, partner at Hemel Hempstead-based Highclere Financial Services, has increased the take up of income protection among his client base by 270% by contacting all the clients he thought were under-insured.

At the beginning of last year he made a list of all the clients with income protection needs who had no cover and sent them letters with worked examples of suitable cover.

Lakey (pictured) says 60% of his clients are self-employed tradesmen in the construction, driving and manual skills industries, who need the cover but often struggle to afford it. Most people did not read the letter so Lakey followed up with a phone call.

‘What you have to do with income protection is find something that’s sensible and affordable and talk to the client about it,’ said Lakey.

Recent policy improvements by friendly societies gave Lakey the confidence to approach clients. He said providers such as Cirencester Friendly, Pioneer Friendly and Shepherds Friendly would now pay claimants when they were unable to carry out their preferred occupation.

Previously this cover was either unavailable or prohibitively expensive for most clients, with the maximum cover paying out when policyholders are unable to carry out a suited occupation.

In one example, Lakey says he was able to save a central heating engineer more than £50 a month in premiums by opting for cover from Pioneer friendly society rather than Friends Provident.

The Friends Provident own occupation income protection had a 13-week deferral period and would have cost the client £110 a month for £1,000 cover. The equivalent Pioneer cover Lakey selected for the client cost £59 a month and was structured to pay out after four weeks.

The drawback of friendly society income protection is the premiums rise with age, the cover is reviewable at any time and few clients have heard of the brands, says Lakey. Another factor that had previously put him off was until recently friendly society income protection policies involved profit sharing.

Lakey says because clients do not want or need profit sharing, Cirencester’s decision to introduce non-profit-sharing policies effectively saves the client 40% in premiums.