Encouraging clients to even think about insurance can be difficult, but research suggests that once they’re focused they can be quite receptive. Simon Hoyle reports.
Often the hardest thing about taking care of a client’s insurance needs is broaching the subject of death, illness or incapacitation in the first place. Life insurance seems to be one of those subjects that clients don’t want to think about, and planners find difficult to raise.Research released late last year by ING reveals the magnitude of the issue that planners face, identifying a range of reasons why people would prefer to discuss almost any other subject.
The findings explain why asking a client to contemplate their own mortality can be a touchy subject, but they also provide some handy insights into how consumers think and therefore how the process can be made more effective. A surprising number of clients would be prepared to take out adequate insurances, if only planners could find a non-threatening way to open the conversation. The research group, Galileo Kaleidoscope, found that when it sent its researchers into respondents’ homes, their questioning prompted the respondents (usually couples) to begin to talk and think about insurance.
In several cases, the respondents subsequently realised their fears and concerns were unfounded, and became quite accepting of the need to be adequately insured. As someone connected to the research joked: “If the researchers had carried PDSs [product disclosure statements] with them, they could have made a few sales.”
So an unexpected by-product of the research is a finding that once the subject of mortality and insurance is on the table, many clients are more receptive than planners might imagine. Even so, the problem of underinsurance persists, and consumer resistance to the overtures of salespeople and financial planners alike is one of the main reasons.
The ING research suggests that understanding the reasons can help planners do their jobs far more effectively. But some of the attitudes revealed in the research can be hard to combat. In one particular case, for example, the husband said he was not prepared to insure his own life, because if he died and his wife collected on the payout, she’d only go and use the money to fund her life with some other bloke – and there was no way the husband was going to foot the bill for that. The research says insurance is “the most taboo subject in relationships”. It says that almost three out of every 10 Australians say the subject of insurance is “too morbid” or “too unpleasant” to raise with their partner.
In fact, 63 per cent of respondents said they had not discussed the issue with their partner at all in the past five years. This suggests that the subject may best be raised when both partners are present. Convincing only one of them that the subject is worthy of consideration is pointless if that partner can’t or won’t take the issue further. But even when the subject is raised, there are a number of further sticking points. Two of the main ones are a prevailing view that life insurance companies are the “bad guys” (and among other things cannot be trusted to pay even valid claims); and that life insurance is simply too complicated.
Planners need to successfully challenge both these preconceptions, if consumers’ confidence is to be won over. Examples of other clients who have made successful claims may be helpful, along with an effort to explain key insurance concepts in simple, plain English, and careful guidance of the client through the (often protracted) application process.
ING says financial planners are “ideally positioned to provide the information and support required to guide a decision on life insurance”.
