Navigating conversations on insurance affordability and value in times of economic pressure

In an environment with inflationary pressures and increasing interest rates, financial advisers are seeing clients facing additional cost pressures across all aspects of their lives.

This changing landscape creates unique challenges for advisers in navigating conversations around insurance affordability and value, without compromising adequate protection. It also provides an opportunity to reinforce the importance of having protections and financial security in place should the unexpected occur, so they can keep living the life they planned.

To help support these conversations, and as part of TAL’s broader support for the financial advice profession, we have worked with our advice partners to develop a range of resources and tools for advisers to leverage.

Within the suite of resources, many of which can be found on the TAL Adviser Centre (TAC) and Retention Hub, TAL’s business insights and reporting dashboard provides actionable insights such as in-force policies and upcoming renewals, policies in suspense, overdue premiums and more—enabling advisers to identify issues or opportunities to open up conversations around affordability as they are required.

The importance of strong adviser—client relationships

Private wealth and insurance specialist with Stanford Brown Private Wealth, Matthew Prain, stresses the significance of maintaining strong relationships with clients.

"The most important element to supporting current clients to retain their life insurance cover is the strength of the adviser and client relationship. This is all about trust, and rests on the adviser remaining engaged with clients and that involves regular, meaningful communication and having a robust review process,” he reflects.

Understanding the concerns of the client is a key element in providing a safe, understanding, and supportive environment for these conversations to take place. This is particularly relevant in the context of cost-of-living pressures.

Clients with mortgages, in particular, have experienced significant increases in monthly repayments, prompting them to question their expenses, which can include insurance premiums. In many cases, though, it is these clients who arguably have the highest need for insurance protection, to help them remain financially secure and on top of their finances in case life doesn’t go to plan.

A robust and detailed review process is key

For Matthew, it is important that a detailed annual review conversation is had with clients. This is an opportunity to discuss why the client took out the cover, and what their circumstances and needs look like at review time.

“By revisiting this, we reinforce the importance of life insurance products and reiterate the client’s initial need for protection,” Matthew explains. “By discussing the reasons behind their decision to obtain coverage and understanding their current circumstances and needs, we can emphasise the importance of maintaining insurance. Clients often overlook the fact that the cost of not having protection when something goes wrong can far outweigh the cost of premiums.

“Further to that, while cutting the cost now might seem appealing in the short term, if people seek to reinstate the insurance cover when budget pressures lessen, and then need to be re-underwritten a number of years after the initial assessment (when they are then a number of years older), it is likely to cost more or have potential for additional exclusions,” he continues.

This review also provides a valuable opportunity to revisit the client’s levels of protection, reminding them how their specific needs and circumstances were considered when the policy was established. By incorporating recent claims examples and storytelling, advisers can effectively demonstrate the value of insurance and its impact on individuals in similar situations. At this time, advisers can also reassess clients’ unique needs and identify if the cover they hold continues to be appropriate.

Strategies to improve insurance affordability

During this review, opportunities can be identified to reduce costs where possible by considering the features of the client’s cover, while also discussing the current life insurance market environment and explaining why premiums have increased in recent years.

“We can also discuss how appropriate their policies are and look at ways to address affordability issues. Doing this proactively and on a regular basis can help clients feel more secure and trusting of their adviser, while making the conversations around maintaining cover much easier when times get a little tough,” Matthew says.

Other ways of reducing costs include reviewing cover levels to ensure clients don’t hold more cover than they need, as they may have had a significant life change and do not require the same coverage level as they did when they originally took out the policy.

Other aspects of protection that may be reviewed to improve affordability include the consideration of agreed value versus indemnity contracts, waiting and benefit period options, as well as ancillary benefits that may be on a client’s policy such as accident and critical illness options. In some cases, adjusting these can considerably decrease client premiums.

Contributing to the health of clients

Finally, many insurers now also offer incentives to clients for preventative health checks and other proactive health management activities—such as TAL’s Health Sense Plus, an automatic 5% discount on premiums that applies to new customers for up to two years. “Insurers should consider strategies and tactics that support the wellbeing of customers by promoting proactive heath management. Ensuring that clients are aware of these kinds of incentives can improve both affordability and individual health outcomes—it’s a win-win for everyone,” says Matthew.

By proactively having supportive conversations about insurance product affordability and value, advisers can ultimately improve trust and strengthen the relationship with their clients. Through collaboration between advisers and life insurers, client retention and satisfaction can also be further enhanced, ensuring the best possible outcomes for the client.

Matthew Prain—Private Wealth Adviser, StanfordBrown

Matthew’s passion lies in understanding clients’ risk protection needs, helping to set them up with appropriate cover and reviewing this regularly throughout their life’s journey. Working in the Insurance industry for 20 years this year and having actively advised and overseen clients’ insurance needs for almost 15 years, he has seen the difference insurance can make to their lives and that of their family and business and the devastating financial impact of not having the right cover in place.