Presenting insurance solutions to cost conscious clients ......

Now don't try this unless you have actually fully explained the ramifications of structuring insurance cover this way and have a very deep understanding of your clients total financial situation. Once you have done this however then the ability to structure insurance cover through superannuation provides in the current climate an opportunity for people to get the insurance cover they need without the deep concern about cashflow and the ability to make ends meet.

Whilst families and small businesses are doing it tough in an environment of rising cost of living pressure what PCE has been observing is : clients reducing levels of cover, clients ceasing covers and less referrals coming into financial planning / insurance offices and a lower strike rate that advisers are having when positioning total insurance solutions.

This has led to a boom in the direct insurance market which is a concern as it has devalued the advice the all important advice that is needed to properly structure and forward underwrite insurance policies rather than be left with the uncertainty of cover breadth when they are assessed at claim time.

So one of the advisers PCE works with has a presentation piece which we thought was quite effective especially in the cost conscious space of family advice.

No we can argue later about the fact that most households spend a greater percentage of gross income on alcohol, tobacco, foxtel than they do on personal insurances and having a discussion about their priorities is paramount .....but for now try this.

So you have worked out your recommendation: and say for example it is

Life cover $2 million
TPD cover $2 million
Income Protection $7500 per month
Trauma $500,000

Now for a 45 year old, male white collar the premiums look something like this :

Life cover $2 million $120 per month
TPD cover $2 million $110 per month
Income Protection $7500 per month $200 per month
Trauma $500,000 $190 per month

And the client sees that this insurance package is costing $640 per month.

Expecting resistance? They could get a new car for this.

So this is how the adviser PCE knows pitches it:

Life cover $2 million - premium paid via super
TPD cover $2 million - premium paid via super
Income Protection $7500 per month - premium paid via super
Trauma $500,000 $190 per month - premium via your bank account = less that $50 per week, less than $10 per day.

Ok.....so psychologically all the client has to come up with is about $8 a day, two cups of coffee.

Now should you have income protection via super? Should you have all the cover via super? It depends and of course you'd be discussing that with the client and your 40 page Statement of Advice (have you seen the post FOFA SOAs....that's a topic of a forth coming blog entry!!)........but if its the difference between providing for a family or having them without adequate insurance....well that's a question you can answer for yourselves.