Advisers"missing" business protection opportunities
For intermediaries only
Nearly a quarter (25%) of advisers with corporate clients have seen demand for business protection rise in the last five years, research by VitalityLife has revealed.
However, according to a study by Cicero last year, business protection"wasn't a business focus" for 60% of advisers.
It also showed that advisers found that 50% of their clients believed they would rely on a ‘plan B' should the worst happen, while 66% said they did not see a need for it and 64% said they were not interested.
"Whether you are a pensions adviser, a private client adviser or an adviser with links to solicitors and accountants, with around 5.9 million businesses in the UK, it's unlikely that you would not have come across a client who could benefit from business protection," said Stephen Crosbie, protection director at Aegon UK.
"And advisers who aren't selling business protection are missing out on a potential income stream. Business owners invest more than just money in their businesses, they often involve a lot of blood, sweat, tears and emotion. For many, their businesses are an integral part of their lives, central to their day to day life. So it makes sense that the business should be given the same financial protection as a member of the family or asset, if not more."
Supply and demand
According to the VitalityLife research, which surveyed 200 advisers with corporate clients, 28% said they wanted to see improved product features and 24% wanted more support and training to help them meet the needs of their clients. Meanwhile, 14% would like to see new business protection tools, including tele-underwriting support and sales collateral.
The business protection advisers surveyed said that the increased demand they had witnessed was being driven by increased awareness amongst businesses about the need for protection, a rise in SMEs and the self-employed, and legislation brought about to allow for tax-efficient relevant life cover products.
"It's great to see that enquiries from businesses for protection insurance are rising," said Craig Palfrey IFA at Penguin Wealth."This is a crucially important area and one that is sometimes overlooked by advisers and insurers. Essentially, it is often the same clients and the same products - but with the angle focused on protecting the future of the business as opposed to the mortgage or family. And with auto-enrolment, relevant life and ongoing insecurity around UK business and finance, the need for advice on business protection is only likely to increase."
The 14% of advisers with corporate clients that had seen a decrease in business protection conversations over the past five years said this was due to an ageing client book focused on retirement, cover already being in place for a majority of clients and because selling it can be a long, drawn-out process.
The VitalityLife research also revealed that a large number of advisers are not prioritising their own business protection needs, with almost half (46%) not having any cover in place for their company - rising to 59% for advisers that are sole traders. This could be down to the fact that just 48% of advisers regularly advise on business protection matters, compared to the 88% that regularly advise on personal protection.
Deepak Jobanputra, managing director at VitalityLife said:"Business protection is often neglected by company owners, yet it is vital for people to safeguard against the unexpected loss or illness of a business owner or a key person. This is why it is encouraging to see these results showing that more people are actively seeking out this type of protection.
"Over the past few years we have seen a real step-change in information and the support available to advisers around business protection, but it's clear there is more that can be done. This is one of the reasons we have a full spectrum of flexible products, aimed at specifically meeting the needs of the different types of businesses on advisers' books.
Product enhancement and support
In October 2019, VitalityLife enhanced serious illness cover for business, while tele-underwriting involving trained nurses was added to its relevant life and business protection plans alongside increased guaranteed insurability options (GIOs). It also added signature-free online trusts and increased the maximum cover on its business protection plan from £500,000 to £1m.
Aegon, meanwhile, also added online trusts for business protection last year and updated its online process to match whole of life cover.
Aegon has also launched a guide to help advisers grow their business protection business. Aimed at a wide range of advisers, it covers tax and trust implications, identifying potential clients and employee benefits for small and medium-sized clients.