I have personal insurance in place for my family – full comprehensive cover, which ensures that if either my husband or I cannot work, or if we pass away, we’ll be covered. I took it out before I even became a financial advisor because it gave me a lot of peace of mind. Personal insurance is a great safeguard, and I like to ensure that my clients feel that reassurance as well. It’s so important to know you’re protected for the long-term.
When I take clients through the advice process, I find that a huge part of it is education. Many clients have never thought about situations where they may need to make an insurance claim, or need that financial support. Also, many often do not know what’s available to them out in the market.
If you have a young family it’s no longer just your spouse you have got to worry about, you have got other dependents relying on your ability to earn an income, so this needs protecting. If you are buying a home, or already have a mortgage, insurance helps you make sure you can maintain a roof over your head and protect that main asset which is key.
I understand that insurance often isn’t a priority for many young people. But the younger you are when you take insurance out, the more you’re going to save, by way of premiums, in the long term. As you get older your chances of experiencing health issues increases, therefore it costs more to insure you.
If you start earlier, it’s more cost-effective, because a level premium structure means the ongoing annual cost will be based on the age you are when you make the application. If you have had existing cover in place for many years, you’re going to be getting it for a lot less cost than someone who’s coming in at 40 and taking out the same cover.
The other thing to note is that one insurance policy doesn’t cover everything. It’s a lot more complex than that. That’s why I usually ask clients if they have thought about different scenarios so we can work out what they need to cover. This may be debt, income and, if the kids go to private school for example, insuring that. There are many elements and it’s very much case by case for each client.
Insurance is also a balance between what you would like to protect and what you can actually afford to protect. There’s got to be give and take. So even if you can get some cover in place, you’re going to be far better off than not having any.
An important part of my role is helping clients choose the right product. There are many providers out there with widely differing definitions and policies. We do a lot of research to understand premiums – what is my client actually getting for their money?
The industry has changed a lot in recent months. We’re moving away from a commission-based structure, which didn’t always serve clients best. These days clients pay an upfront financial advice fee for us to advise them on this complex area. This covers the time we spend getting to know you and the research that we do for you.
Our role also doesn’t end when a client agrees to take up personal insurance. A key element of the process is managing a claim and we can help with that. At a point in time where they do go through trauma or experience a particular event and want to claim on their policy, we can support them to make that process as smooth as possible. For example, they don’t have to directly deal with the insurer. We can help with the paperwork and make sure they have everything in order to ensure they receive that financial support as soon as possible.
Over time, I’ve helped many clients claim on their insurance and I see it in the feedback we get from them – they are extremely thankful that we can help them through a time of need and trauma. It’s comforting to know that they’re not alone and we’re there by their side. For me personally, it’s very rewarding to know that I’ve been able to support clients through a challenging time.
Zoe Midwinter is a Senior Financial Advisor at Viridian Advisory
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