Putting protection in context

From the extreme weather conditions to the January sales, the start of 2010 certainly provided some interesting predicaments for those people looking to put their lives into perspective.

Normally when people complain about being 'snowed under' they are referring to being overworked. But this January many, including the self employed, found that weather conditions had a severely detrimental effect on their income.

Even the best consultant or contractor, for example, was unlikely to be able to charge a fee if they could not physically get to their appointment or if their client cancelled as a result of similar logistical problems.

Those who found themselves literally snowed under for up to three weeks should therefore have received a poignant reminder of the type of devastation that could be caused by a more prolonged absence of income resulting from an injury or serious illness. So at least the recent freeze should have made some people less likely to have cold feet about protection.

The willingness of UK shoppers to defy the recession and splash out nearly £5 billion in the January sales provided further significant food for thought. Research from Bright Grey reveals that over half a billion pounds is likely to have been wasted in the January sales this year, with people throwing money away on items they don't need or won't use.

“the recent freeze made people less likely to have cold feet about protection”

For example, a staggering 57% of women have bought items of clothing they have never worn, and 10% have even bought clothing a size too small in the hope that they’ll slim into it. Furthermore, more than half of people who shop in the January sales said they tended to do so spontaneously, compared to only 21% who said they research prices and shop online to be sure of getting the best deal.

Roger Edwards, proposition director at Bright Grey, says "Getting carried away when sales shopping can be a dangerous habit, particularly as 2010 looks set to be another tough year for many of us financially. By simply cutting back a little we could put the money that's saved towards protecting our lifestyle and giving us financial security in the event of a serious illness or prolonged time off work."

Edwards also highlights a tendency for consumers to assess their regular outgoings during the first couple of months of the year, and in some cases this can lead to them questioning the value of their protection payments and to cancelling direct debits. But he stresses that IFAs who make the effort to contact clients to discuss their protection needs can go a long way towards stopping this happening.

"Some people who have hit hard times are always going to cancel anyway, however hard you try to stop them, but our experience suggests that most are far less likely to cancel if you get on the phone to them first," he continues. "Some who have been reviewing their premiums may even be in the market for more protection cover, so IFAs who haven't made contact for a year or two could suggest a protection review.

"Many mortgage clients, in particular, can have their details left in a drawer and forgotten about. But if an IFA has successfully handled what may be the biggest and potentially most stressful financial transaction they may ever make, the client is more than likely to trust them to handle their protection needs. Even just sending someone who only has life assurance a booklet on critical illness cover can prove surprisingly effective."

Taking a more proactive approach towards clients who have previously been viewed simply from a transactional perspective should therefore be a high priority for IFAs at the present time.