It’s time for your financial wealth check
For adviser use only
As an adviser, you work with your clients to make sure their investment strategy matches their goals and risk appetite. Setting clients on an appropriate long-term plan is the 'day job', but it’s not just investment risks that you can help your clients address.
Our recent research ‘Protection matters: does women’s financial planning match their priorities?’ highlights that even among those with a financial plan for their future, many have all too often overlooked their protection needs - which could make all the difference if illness or even death disrupt the income on which their plans rely on. As an adviser, you play a key role in highlighting the importance of adding protection to their long-term plan to make it robust and secure against life's ups and downs.
We found that many women often overestimate the support they’d receive from the government. When compared to the Office of National Statistic’s average salary for a full-time working woman of £480 a week, the current Statutory Sick Pay stands at just £88.45 a week, (for 28 weeks), highlighting the stark shortfall.
While your client may believe that their partner’s income would be enough to support them and their families – would it be enough in reality? Or they might imagine that they can fall back on their savings, but they may be out of work for longer than they think. Our research found two in five women would rely on their own savings if they couldn’t work for six months. However, the harsh reality is 16% of women have no savings whatsoever, 16% think their savings would only last up to six months, while just 13% of women think they’d have enough to cope financially for a year or more.
Government support is there to act as a final safety net, but it’s unlikely to provide a comfortable standard of living. While there’s some government support in the event of long-term sickness, it’s rarely anywhere close to what the average family needs to cover their usual costs.
What could go wrong?
According to Cancer Research UK, one in two people will get cancer in their lifetime. In fact, 473 females a day were diagnosed with cancer in 2013. And according to Stroke.org, by the age of 75, one in five women in the UK will have had a stroke. What’s more, the Health and Safety Executive found that 11.7 million working days were lost in 2015/16 due to work-related stress.
Take the example of Suzanne, a company owner and college lecturer, with a family. Her life was thrown into turmoil when, during a routine screening, she discovered that she had breast cancer.
Those most at risk are clients who have children or other dependants. They may have education or childcare to pay for, rent and bills to meet or mortgages to pay. They may not have thought much about the sorts of ways they’re dependent on their income until they start to reflect on what would happen if it suddenly wasn’t there anymore.
Forms of protection
As an adviser who knows your clients, it could be time to bring this to their attention. No-one likes to highlight bad news, but like Suzanne in our video, your clients could come to thank you greatly if you take them through the risks they face and how you can help them guard against them.
Benefits can range from one-off lump sum payments to regular income solutions. Options can be selected from menu-based policies that can be matched to your clients’ individual needs. Protection comes in a variety of forms from different providers. Income protection (IP) and family income benefit (FIB) policies can be arranged in a variety of ways to suit your client’s circumstances and their budget.
Some providers offer cover for access to counselling services and rehabilitation treatment. As you saw in the video, the claims pay out gave Suzanne some breathing space to allow her to focus on completing her chemotherapy and recovering.
With our critical illness policy for example, your clients’ children would also be covered up to the age of 18, or to 21 if they’re in full-time education. This could allow a parent to take time off - or even take a career break - to support their child through illness.
So there’s every reason for clients to consider protecting their income and their loved ones. The risks are there and the benefits are clear. Moreover, as Suzanne found, the claims process is straightforward and hassle free. All in all, a financial wealth check makes sense.
Serious illness and death can strike anyone at any time. As an adviser, you can help your clients by explaining what a family wealth check could mean to them. To find out more about how we can help you protect your clients’ income and loved ones, visit aegon.co.uk/protection
So to summarise, these are the key ideas to discuss with your clients:
- Have they considered what they’d do if they were unable to work? What would they do if they couldn’t rely on their regular income?
- Partner’s income, state provision, and savings – these may not be enough to sustain them and their dependents for as long as they think. They may be off work a long time.
- There’s a range of protection solutions to choose from. A balance of lump sum and income provision can be arranged to meet clients’ individual circumstances and needs.
- Above all, protection provides financial support and peace of mind when they and their family need it most.