S1:EP7 - Prioritising Income Protection During the Mortgage Advice Process with Ollie Basnett

In today's episode

We speak to Ollie Basnett from New Homes. Together, we uncover why income protection should be a top priority for clients, especially when purchasing a new home. 

In #AskIPTF this week, we’ll be answering some of your burning questions with questions on ASU policies and Executive Income Protection

And of course, we finish up with Matt's Top Tips of the Week, covering simplification, the use of stories and prioritisation.

📣 For More Education, Collaboration and Insight:

IPTF Website
IPTF on LinkedIn
IPTF on YouTube
IP Task Force on Instagram
IPTF on TikTok

Produced and edited by SEA Studios

Transcript

Intro and Welcome

Speaker 1 0:10

Hello and welcome to let's Talk IP by the Income Protection Task Force, the podcast that shines a light on the often overlooked but vital insurance income protection. I'm your host, matthew Chapman, aka the Protection Coach, and welcome to Season 1, episode 7 of let's Talk IP. Thank you so much for tuning in today's podcast. Now you know how much I love to tell you guys how great you are for listening to this podcast. I always respect any advisor who takes time to try and improve their skills and learn from others. It's what I've done all my life and it's what I'm hoping you guys get from this podcast. It's what this podcast is all about. So, from me and the entire team at the IPTF, a big pat on the back from us and a huge thank you. And don't forget, you can claim your unstructured CPD points. So make sure you write down what you learn in this episode to claim those points.

Speaker 1 1:01

As it's now June, can you believe it? Where has the time gone? Our focus now turns to iPore. Yes, the countdown has begun. For those that don't know, ipore is five webinars across the week of the 23rd of September 2024. It's going to be jam-packed full of brilliant content, with voices across the industry and with even more CBD points to bag Yours truly. We'll be doing some advisor role plays and I'll be showing you how not to sell protection. It should be quite funny to listen to, but there's so much more than that as well. All the links to register the webinars are in today's episode description. So just pause the podcast. Get registered right now. Go on. They are not ones to miss these episodes, right well hopefully you're now all registered for iPore.

Speaker 1 1:41

So what's coming up on today's show? Well, hopefully you're now all registered for iPore. So what's coming up on today's show? So in this week's interview we're talking to Oli Basnik from New Homes. We're going to be delving into what they've been doing as initiatives to help get their customers protected and ring fencing income sources very early on in the mortgage advice process. You do not want to miss out on this one. After that, we'll be answering some of your burning questions in hashtag AskIPTF, and this week we have questions on ASU policies and executive income protection. So stay tuned for that.

Interview with Ollie Basnett

Speaker 1 2:11

And of course, we finish up with my top tips of the week, and this week I'm covering simplification, the use of stories to bring protection to life and, finally, prioritization, focusing on income first. But for now, let's talk IP with Oli Basnip. So welcome, Oli Basnip. Thank you for joining me today. How are you, my friend? Very well, Matt, Very well. You all right, I'm really good. Thanks, mate. The only problem is I do want to apologize to all the listeners ahead of time. You're going to have two Brummie lads now speaking for the next 15, 20 minutes.

Speaker 3 2:49

You're going to have to get used to the accent. I do apologize. Ollie's a local lad to me. You're only down the road, aren't you mate? I am, yeah. Unfortunately I've adopted quite a midlands accent through uh, working at wall ramps and can it for many years. So again apologies for that as well no, nothing wrong with that at all.

Speaker 1 2:59

Welcome to the show. Really appreciate you coming in today and obviously you're one of our special guests and I brought you in for a specific reason which we'll get into in just a minute. But before we get there, if you could just let the listeners know a little bit about yourself and your very brief career history where you've been working at?

Speaker 3 3:11

So I'm working as the mortgage and protection director at New Homes New Homes Mortgage Services now and I've been here since 2014. So, yeah, 10 years of kind of hard work in the new build game is taking its toll. Certainly. My hairline and prior to prior to that, started off pretty, you know, through a state agency out of school and then went through kind of financial services, through kind of connells, moving into kind of a remortgage game at some point and uh, and then ended up at new homes when I was kind of a 24 year old young lad, not really sure, no idea really what I was getting myself into. To be honest with you, I'm still here. I'm still here. So it's a bit of a whistle-stop tour in all honesty. But, yeah, done a bit of everything advising, sales managing, and now I've got the entire kind of existing client team under me here at New Homes.

Speaker 1 4:02

That's fantastic, and so there's a reason I brought you into this call. I wanted you to feature on today's episode of let's Talk IP, and it's because we've obviously we've had a bit of a good working relationship for some time. In fact, I'm sure you'll tell the listeners in a minute as to how we kind of got to know each other a bit more. I mean, we'd known of each other for a while and then you actually asked me to come in and do some work, didn't you, with the guys? But before we get there, if you could just briefly tell us. So I know obviously you're passionate about income protection. You and I have had this conversation many times, both in work and also down the pub as well, in Hampton and Arden. So briefly, tell us what's the why? I mean, most advisors have a reason why they think income protection is really important. So walk me through why you think income protection is a really good product.

Speaker 3 4:46

I just think it the most obvious product in all honesty. It's it's far it's. It's the. It's the product out there that clients are most likely going to be using. If you think about yourself, matt, you take away your income from your household for a certain period of time. It's really going to screw you over and I just think it's just the kind of most obvious choice. It's not tied into a mortgage. The money goes direct into your bank account.

Speaker 3 5:07

You know the chances of us these days of having accidents and illnesses et cetera is far more higher than kind of dying, for instance, where people seem to lead with life insurance, no idea why. Me and you can have a conversation in the pub for five minutes and we'll know people have been off work due to accident or sickness, probably recently and stuff. So I just think it's the most. It sounds a bit weird, but it's just the most obvious policy for clients to be taking, in my opinion, because it's just they're far more likely going to be helping people than something that's kind of a client's paying for don't typically know what it is. Direct debit's coming out, review it with them after a couple of years or so and they don't have a clue what it is Exactly. So that's it really to be honest.

Speaker 3 5:51

A bit of a generalized answer, that's a great summary.

Speaker 1 5:54

It's a superb summary, matt. I actually don't think I could have said it any better myself, because the thing I love about there is that you're actually bringing it to life, and I think this is what we all forget Now. A lot of the advisors out there often think of it like, well, it's just another product. We're talking about product. It's not about products. It's about the reality of the situation when someone needs to claim. The thing that really sort of resonated with me there, you know, considering what we're trying to do on the let's Talk IP podcast is this idea of actually it is the product that people are most likely to need to claim on, and I think but it's a really great example.

Speaker 1 6:21

If you think back to COVID and when people found themselves unable to go to work, which was the thing that affected millions of people in the UK, it wasn't as if the government turned around and said, well, what will do everyone?

Speaker 1 6:34

If your spouse passes away from COVID? We'll clear the mortgage. If you get put in an ICU, we're going to give the spouse 50 grand or you 50 grand. What they did was they introduced the furlough scheme as a form of replacing our income, because the bills didn't stop, even if we did, and I think that's so true because what you're saying is a illness, injury, and I love the idea that you're saying, oh, we're down the pub, if we chat for five minutes, we're going to find someone that we know both of us and I'm sure if our list of people who would find themselves out of work even for a short period of time, and the impact can be dramatic and it's very hard to recover from that.

Speaker 1 7:00

And I think that's really really kind of like the underlying symptom of what we're talking about here and why it's so important as part of the advice process. Now, one of the questions I do want to ask you, if that's OK, before we get on to a bit more of the detail around what new homes are doing and what you have been doing, some of the initiatives that you guys put into place, there's a question I want to ask you, which is when you're advising, because you mentioned obviously been told as an advisor before you started selling income protection. That would have probably helped you to see the value of it much quicker.

Speaker 3 7:34

I remember when I used to work for Connells, we couldn't sell income protection, we only had life and kick. And I remember when I was at Connellars there was this big income protection launch. So we sat in there. I think Legal General came in, or whoever it was at the time, and they sat down, they gave you the mechanics how an income protection policy works. This, that, this, that All it did was blow everyone's mind.

Speaker 3 7:58

Now, if only they'd just come in, stood in front of us and basically said if you cannot work, okay, due to accident or sickness, it'll pay you an income, okay, because at that point then it would have resonated I'd be like, right, okay, I understand exactly how that works.

Speaker 3 8:19

Whereas you know they want to tell you the mechanics, they want to tell you about the occupation classes, they want to tell you about all the deferred periods and blah, blah, blah, blah blah. Whereas with a life and kick policy it's relatively straightforward. If it's £200,000 DTO for 25 years, you pretty much know what it's going to be. So I wish that someone would come in explain to me what an income protection policy was the values to the client rather than the absolute mechanics of how one works. So then you're then trying to reel out and speak to a client and tell them exactly how this policy works, and do that because that blow the hell out of their mind and you just divert back to a life and kick policy. Yeah, if someone had come in and simplified it for me pretty straightforward I think I would have kind of been on board straight away.

Speaker 1 8:58

I think that's brilliant, mate. That's such a great analogy, and I think the reality is that's a problem across the industry, right? And then you take it one step further, and that's probably an issue that we've got communicating with consumers as well, in that you know we're focused on the product what it does, like you said, the mechanics of it.

Speaker 1 9:13

I think it's a great way of describing the mechanics of the product, but actually let's just focus on what's it actually going to bring me? What does it give me in terms of value? How does it help me achieve my goals and objectives? And then, when you can do that, obviously it's going to be far more relatable and far more contextual. And I use this example of KISS keep it super simple, because I think, whether you're a BDM speaking to an advisor, whether you're a trainer teaching someone how to do this or what the product's all about, or whether you're an advisor actually dealing with the consumer, keep it super simple so we can make the most relatable examples. I think I used the one before, which is you think back to what you just said. Income protection is like your own private furlough scheme. You think of it that way Everyone knows what the furlough scheme did, everyone understands the contextual side of it, and then it's very easy to explain it in a way that because consumers can kind of get their heads around. I think that's brilliant.

Speaker 3 10:07

So let's get into what we've been doing together as a team and the initiatives that you've been got. So how did how do we get to work together? The powers of LinkedIn. So I reached out to you, um, because I was watching some of your videos, um, and initially you watch videos like, oh, you know another typical video on LinkedIn, for instance, blah, blah, blah. But I remember watching yours a lot of the time. Thinking makes a lot of sense. To be honest with you, you almost don't want it to make sense. You're always like, oh, another guy just talking, but it really really did. So I reached out to yourself because I thought there'd be a lot of merit kind of trying to adapt and adopt, kind of your theories and stuff and get it within our advisor team.

Speaker 3 10:46

So I know me and you met for another beer okay, there's a trend here and basically had a discussion, didn't we, in regards to how we can kind of get you in. So, cut a long story short, we got you in front of all the advisors for a training session with with yourself, which went down really really positively, because you never really know with advisors, do you, whether you know change is here and stuff and you know. And then you do get the old classic thing of ah, you know, I know best, what can this guy tell me? What I don't already know, type thing. So we brought you in, spoke to advise, had some really really good training sessions. They've actually asked for us to kind of go back through the slides as an advisor team as well and revisit it because of the there's um, some of the advisors are now thinking, starting to forget it, kind of thing. So we started working together really through that, to be honest absolutely, you spot on.

Speaker 1 11:38

And what's lovely about the training sessions that we did again, and the reason that they resonated so well isn't because we were reinventing the wheel, so to speak, but again we focused on the simplicity, so it was about giving them techniques and skills. That they resonated so well isn't because we were reinventing the wheel, so to speak, but again we focused on the simplicity, so it was about giving them techniques and skills that they could probably embed into their advice process that were quite easy to adopt and adapt, as you were saying. Rather than it being something overly complex or overly salesy, it was about the logical side of things, because if it makes sense to you, it's going to make sense to the customer. Now, what I really love about what new homes are doing the reason I've asked you to come on the podcast today is because you guys are really focusing on the needs of your customers when it comes to new builds. So I brought you in because I imagine there's a lot of advisors out there who deal with customers who are buying a new build or a first time buyers, and that's probably the majority of the clients that come through you as new customers. I know you've got a big back book as well. But a lot of the ones that come through to you are probably being referred over by builders that you've got relationships with. They're going to see a sales negotiator on site, they get referred over to one of your guys, they've been qualified and eventually they're speaking to a mortgage advisor about potentially buying all these properties.

Speaker 1 12:33

What I thought was exceptional about what you guys were doing is recognizing the relationship between the client having those protected income sources in this early stage process and their ability to go ahead with their goal, which is to obviously buy this home. And we talked a lot about this and I kind of just wanted to prompt you on what the mindset was there within the business around that. Because this idea that you're understanding and you can get into the detail if you like, but understanding the relationship between someone coming through the doors, looking to get onto the property ladder with you, you recognizing how important it is to them, and then also accepting that if someone comes in and goes through, say, a 28-day exchange window where they reserve a property and then have to get the mortgage offer back out and exchange those contracts in 28 days, there could still be a potentially long build time. Is that fair to say? And then walk me through then what new homes are doing to try and counter that risk.

Speaker 3 13:24

So a couple of things to be honest with you, and you're absolutely right, yeah, probably say 60% of our business now does come through the new build channels. So a lot of the clients we are now qualifying, for instance within our helpline, you know, aren't looking to move in now until like February, march, april next year. But the builder still expects you to kind of be exchanging contracts within the 28 days or six weeks, whatever they're kind of. So what we're really really homing in on is the fact that you know a lot can happen within 12 month period, for instance, which a lot of these people we are speaking to, um, you know they're not going to be moving in for another 12 months or so. So, especially around the income is there's a couple of things. What we're starting to do initially is once the advisor is actually speaking to the client. So tonight, for instance, okay is they're, they're doing the mortgage, that they're having the full-on, you know um protection conversation with them leading with income protection as a complete forefront of the conversation, with a view to be starting that income protection policy on exchange of contracts.

Speaker 3 14:32

Okay, so we now know, regardless what happens between now and next February or next March, mr Customer or Miss Customer, for instance, we know if you can't work due to accident, sickness, you're still going to be getting an income. Ok, and as we know, because we discussed it previously, some lenders still lend on an income protection policy alone, still lend on an income protection policy alone. Um, so what we're effectively trying to be trying to do is absolutely financially secure them from day one so whatever happens to them, they can still buy the property. Even if they don't buy the property, we know we've done the very best advice because they've potentially got an income now up until retirement.

Speaker 3 15:15

Um, so that's kind of um stage one of what we're kind of ideally looking to, kind of um put into the advisors heads which, to be honest with you, most of them are doing now. Very few of them are doing it from completion. Okay, because they understand, unless, for instance, we've got like a build date within four to six weeks, something you might find that the the client will want it on completion, especially ones where we've got the build dates over kind of three to four months or so. Now, another thing that we did experiment and we were actually discussing with you, I remember is seeing if we can actually look at the income protection model before that what we're actually trying to do now is we're trying to implement it earlier in the process.

Speaker 3 15:58

Actually trying to do now is we're trying to implement it earlier in the process, so even before they've even potentially found a property it's when clients and stuff call into our helpline looking to potentially buy off a builder, for instance, up to £300,000,.

Speaker 3 16:10

We actually want to bring the conversation at this point to say, right, well, it's all well and good looking to buy a property now, but what if you were to lose your income? Because if you do lose your income, then the whole idea of you potentially buying the property up to £300,000 on such a state could potentially become null and void. So, adapting and bringing that into the process to basically say, right before we even want to discuss your mortgage, what we actually want to do initially is completely financially ring fence you so whatever happens to you, whatever life throws at you, you can potentially still buy a property. So they're just two of the ideas. So, yeah, 28 day exchange, starting from there for the properties that are kind of over a certain period of time, and actually bringing it forward and implementing it earlier in the process as well, are two kind of main things that we're trying to adopt and kind of bring into the firm.

Speaker 1 17:08

I think this is brilliant, mate, and I absolutely love it. You know, you and I've talked about this separately, and this is kind of why I wanted you on the show, because I wanted other advisors, potentially other firms dealing with new build customers, to listen to this. And do you know what? The same principles apply, whether it's new build or not, particularly the latter one you were talking about, which is this idea of protecting people's means of borrowing in the first place, before you even worry about applying debts right, and I guess I've got this idea in my head. This is how I see it. From a business perspective, it makes perfect sense. So, commercially speaking, if you think you're then arranging income protection contracts before the client's actually gone through the mortgage advice process, meaning you're ring fencing their deposit, you're ring fencing their income sources and, in theory, you're also ring fencing their credit score all attributes that the mortgage advisor is going to need to be able to go and get that mortgage in the first place. And I often use this example If the client didn't have an income, you wouldn't even sit down at the table. They wouldn't get a seat at the table because you'd be like if you don't have an income, you can't raise borrowing right, and that's not strictly true in all cases, but for the most part people buying a residential home, if you don't have income sources to use to get you a mortgage, most mortgage advisors are going to say thank you but no thank you. So there's that first principle. Secondly, commercially, because from a new homes perspective, if you do manage to introduce that process early on and you're ring fencing those income sources, if the client gets gazoned or they don't buy that property or they lose out on that particular deal or someone else outbids them for that property, it doesn't matter because you still lock them in as a customer, You've still made them more financially resilient and then, at the point when they're ready to find their next property or buy their next home, guess where they're going to go Back to new homes because they're already a customer right. So I think what you're doing there as initiatives are really good and I think it's really important that advisors are listening.

Speaker 1 18:44

Listen to what Ollie was saying there about this idea that if you've got a 20-day exchange window, once the client goes through that process, they are legally bound to buy that property. I mean legally bound to buy the property right and there are significant charges, penalties and consequences of pulling out of a purchase if you've exchanged contracts. It can be very, very devastating, significantly costly, and what we've got to remember is by ring-fencing the income sources, by doing what Ollie's team are doing, by making sure that before they worry about talking about protection later on they're saying look, we're about to lumber you with this responsibility. We've got to know you can do it.

Speaker 1 19:21

And I love this example you gave of lenders also agreeing to lend to people who've got income protection. Just to caveat that to everyone listening, that typically only applies if you've got a full-term income protection plan that runs long enough for the term of the mortgage. So the lender knows that they can still borrow against that income source because it's safeguarded by the fact that it's a full-term income protection plan. So for those advisors who are defaulting to short-term policies, that principle doesn't apply. So you're absolutely right, ollie. So I think it's brilliant. I mean, I love this initiative that you guys got me into coming up this conversation with you, and I think it's really wonderful to see, because you're quite a large organization how many advisors have you got?

Speaker 3 19:50

now Just under 50. They're split up into new build advisors, We've got our remortgage and product transfer advisors and we've got a protection team as well within the firm. So yeah, which equates to just under 50.

Speaker 1 20:04

That's amazing. I mean, to even think about implementing these types of initiatives in a business of this size is quite spectacular, really, because I know it's a bit like turning a tanker ship, isn't it? Sometimes it can take a long time to move these things around. So a couple of things there that I wanted to touch on that I think are really great this idea that they're constantly looking at what they can do to improve the outcomes for their customers and the role that income protection plays in that.

Speaker 1 20:27

And the second thing is and I'm very grateful for the opportunity to work with your guys is this idea of seeking external help. So what I loved about what Ollie did there is Ollie's an expert himself. He understands protection inside out. He's an expert himself. He's been doing the job for many, many years and this is someone who probably could easily do what I do as well. But I just love the idea that he took it upon himself to bring in external support because he felt that would land better with the team. That would introduce these different ways of thinking. That would kind of embellish what they do. And I think new homes are a really great example of a firm that have understood the role that income protection can play in safeguarding their customers, building more resilient customers and ultimately helping customers to achieve their own goals and objectives. And I think isn't that the point, ollie? It's this idea that we're putting plans in place that help the client achieve their goals and objectives not our own Absolutely.

Speaker 3 21:13

yeah, we'd much prefer a client to come away with a single income protection policy than any other plan, in all honesty. So if a client is massively, massively budget orientated, they've got a really small budget, for instance. Then for them to walk away with a small IP plan over a life only plan or something like that is just that's kind of how we work. Want our advisors heads to kind of be leading with the income protection rather than kind of a small, easy life insurance sale I love that.

Speaker 1 21:47

So prioritizing correctly is what you're saying correctly, yeah value for money.

Speaker 3 21:51

At the end of the day it is. They're far more likely to get something out of their ip plan than they are on a dta life plan well, it goes back to what you said at the beginning.

Speaker 1 21:59

Isn't it about making sure that we we prioritize correctly, in a way that actually we know which products are most likely to be claimed upon that are going to provide that benefit and the value of what the customer is going to need from it? I think, as a question I'd really have to ask you before we finish up, if that's all right. Obviously you've got great insight in terms of the types of customers coming through the business. Would you say that your newer clients, maybe your younger clients, are sort of like you know, maybe the 18 to 35 demographic? Would it be fair to say that you're finding they're far more receptive to the idea of things like income protection?

Speaker 3 22:28

massively, really. Um, it's weird you should ask that, to be honest with you, because, um, I think I hate talking about it. I do think covid had a lot to it, because I think you know, one minute we're all fine and the next minute there's this pandemic, or whatever you want to call it, for instance, where no one can do any work anymore, and it did hit home that no one's, everyone's not kind of invincible anymore. So an income protection conversation with clients I do find are, you know, they're far more receptive to talking about it, because you've got that covid conversation in our back pocket now, where there's always a why, for instance, and no one knew that was going to be coming around. And I do think as well, to be honest with you, um, we, we do have a good training structure within new homes and we do find that less is more, like absolutely less is more, for instance. So we really really speak to our advisors and when we're kind of doing your call, listening and helping, coaching them, okay, it's always the clients who say I'll think about it, or or or no is when we've gone into the full mechanics of the plan, how it works, blah, blah, blah, blah, blah. But when you just kind of break it all down and and make them realize that if they do not have an income it would totally screw their lives potentially. And there is a solution.

Speaker 3 23:53

It's when they start chasing you for the policy and they start saying, right, is that ready to go on risk now? For instance, we've had a few recently where clients are chasing us now because they want it, they want it enforced. They haven't even exchanged contracts, they're nowhere near it, but they just want it enforced because they understand how important that is. It's nothing to do with a mortgage anymore, it's nothing to do with the Halifax, it's nothing to do with a new build site anymore. It's actually taking them out of the equation for now. This is ensuring your income. So, regardless of whether you buy that property, regardless of whether you go there, regardless of whether you do that, you've still got income and I think that's kind of so. It's an element of clients being more receptive. But advisors understanding how to actually get the point across to the customers rather than just pretending they're some insurance expert bamboozling their minds. They talk, they're completely confused and want to walk away from the whole thing altogether.

Speaker 1 24:52

I love that. You know I couldn't have said it better myself because I've said it for so many years that the danger is that advisors get far too technical, far too quickly, and what they really need to be focusing on is winning the hearts and minds of the customer, explaining the value of the plan, how it relates back to the client's goals and objectives, as you said, which may or may not be the mortgage in this instance, because advisors tend to hone in on that first and foremost. So in actual fact, it may just be feeding their children. That's the number one priority. As long as you position it correctly and show the relationship, it's easy to do. It's easy to create the value. I think that's a really great point to leave on, because any advisors listening there that have got this kind of objection in their mind that clients aren't interested in income protection or don't want to talk income protection I think you've almost just like thrown a grenade in there and poo-pooed that one, because we've made it very clear from what you're saying, in an organization of nearly 50 advisors, you're showing how, just by simple change in positioning, just by highlighting the value and stepping back from the technical mechanics of the product first, and just really winning the client's hearts and minds is a great way to overcome those issues.

#AskIPTF

Speaker 1 25:50

But other than that, just wanted to say thank you so much for for coming today. Ollie, really appreciate you jumping on the show and for you sharing the experience with new homes. I think a lot of the advisors that will probably draw a lot of inspiration from that understanding what you've done and why you've done it. And I think it's wonderful to hear how you believe in the simplicity of approaching income protection and how essential it is to all of our lives. So thank you again for coming on the show. Really appreciate it, ollie bassnick, from new homes, everyone hey, tom, thank you very much just having me thanks so much, ollie.

Speaker 1 26:20

as always, a pleasure. Look forward to seeing you down the pub, mate. Now it's time for hashtag AskIPTF. Do you have a burning question that you want to ask me? Why not become part of the show by sending a WhatsApp voice note to 07442 247 280. That's, 07442 247 280. If you don't fancy leaving a voice note, you can always email us on letstalkippodcast at gmailcom, or just comment and post on LinkedIn X or on our new Instagram account, ip Task Force UK using the hashtag AskIPTF. Right, who's on the let's Talk IP hotline?

Speaker 4 26:55

Hi, matt, it's Andy McKinney here. I hope you're well. Quick question for you. Quick question for you. What would you say? The key benefits are if a client comes to you and they're a limited company and you project and recommend executive income protection as opposed to a personal income protection plan.

Speaker 1 27:11

That's a really great question, andy. Thanks so much for posting it. Yeah, the truth of it is the products themselves are not massively different, other than the fact that one is usually designed for a company and the one's designed for a personal individual. Now what you've got to do when you're doing this exercise is understand what the key benefits of arranging the product for the business or doing an exec contract would be over doing a personal one. So if your client's got multiple income sources some from the business, some personally you might find it's better off doing a personal one. The reason that exec IP is so useful is that it allows you to insure both national insurance contributions and also pension contributions on top. So it is particularly good for limited company directors, employees or high earners who are making significant pension contributions, because you can reinfence that on top of the income as well.

Speaker 1 27:57

Now the thing to bear in mind and the key difference between the two contracts, is that personal cover is usually paid net of any tax, which means what you insure yourself for is what you'd receive net into your bank account. With an executive income protection contract, the benefit is usually paid gross to the organization who is paying for the policy, and then that benefit would then get distributed down to the life assured and typically that would be through paying income tax and national insurance contributions, which is why sometimes the individual may actually net less than what you might originally think. So it's important to do a calculation to understand what the individual needs, to ensure that which product you recommend is going to give them the net income that they actually do need, because the expectation would be that typically the individual will be paid through PAYE, meaning that even if you insure them more than what you might through a personal policy, they still might not end up netting the same amount. So just those differences worth bearing in mind. Naturally, the benefit of having an executive income protection contract is typically it is an allowable expense and you can put it through the business expenses.

Speaker 1 28:55

But again, that's not guaranteed. It's just worth exploring different options. But those are the key differences. Executive income protection is, like I say, really really good for business owners and particularly those who are making large pension contributions, because it allows you to ring fence that and that's really important for those who are taking advantage of those pension tax allowances. And for personal individuals, obviously the benefit of that is going to be that they get the net income. So it's worth using a calculator to calculate the difference and understand which would be better for your customers and have that conversation around things like national insurance and pension to determine if an exec option would be a more appropriate one.

Speaker 2 29:27

Hi, matt, it's Hannah McCallop here, just wanted to get your opinion. I've kind of seen a recent increase in requests for ASU policies with a big emphasis on the? U, the unemployment cover. So just wanted to get your take on that and why you think potentially we're now starting to see a few more requests around it.

Speaker 1 29:46

Great question, hannah, and I think this is something that stumps a lot of advisors, because a lot of customers, for some reason, think the likelihood of losing their job, being made unemployed or redundant is far more significant than falling ill. My counter argument and this is what I often say to my customers when we're having this conversation is that I used to say things like in reality, when you're made redundant, you still have the power and the means to go and find other gainful employment. Now, it might not be what you want to do, it might not be your dream job, it might not be the thing that you desire to do, but if it's something that you need to do to feed your family, to keep a roof over your head and to sustain yourself during this period, you are going to go and find work and in most cases, people have the means and they're able-bodied and able to go and do it. The problem comes when you're made or unable to work sorry, due to illness or injury, because in that situation, right, it doesn't matter whether you've got a job or not, because if you're unable to go to work to physically generate an income, it doesn't matter whether you've got the job or not.

Speaker 1 30:40

So I would always argue that unemployment cover is a bit of a misnomer, because, yes, okay, we're concerned about losing our jobs, and I'm not saying people shouldn't take the cover. But I do believe that income protection should be a priority, mainly because, in reality, if you are made redundant, it's within your power to do something about finding other employment. But if you can't work through illness or injury, it doesn't matter whether you've got a job or not. It's going to be impossible for you to go and generate an income. And so I would say that, from a prioritization point of view, I think income protection, or even the accident sickness element, is far more important than the unemployment side of things.

Speaker 3 31:17

Yo, Matt, give me the tab tips of the week.

Speaker 1 31:20

Go on, then, but only because you are so nicely Right. Today we're going to focus on three key things that came out of the conversation with Ollie, and I thought it was a really fascinating dive into what they're doing at New Homes, and I thought I'd take some of what they're doing and turn that into some top tips for other advisors to assimilate and hopefully implement in their own businesses. The first thing was around simplification, and I think what Ollie said is absolutely true. We do tend to see and particularly when I'm coaching advisors they tend to go in straight for complexity, product technical elements, limitations, exclusions, how the process works, what the product is, what it's called, and I think actually they do so before they've even got the client to understand the benefits of the plan or why it's so important in the first place. Why it's so important in the first place, you're focusing on product, not on solution, and so my advice there is simplification, because in order to create that need in the first place and in order to explain the benefits and the value of the policy, we need to try and use the simplest examples we possibly can. Now, as you heard in the interview, I referenced income protection as being like your own private furlough scheme, or you could refer to it as permanent sick pay cover or whatever you want to call it right, or lifestyle protector. It doesn't really matter what you use. You need to try and find simple ways to bring it to life and explain it to customers so they can get their head around why it's so important. And often one of the clever ways of doing this is to use simple examples of how the benefit would be used. Feed the kids, keep the lights on, keep a roof over your head all those things that actually drive and motivate people to take action the reason they very much get up and go to work in the first place. When we do that, we're far more likely to get the client engaged. So use simple examples first, get the client engaged and then, once you've got that commitment to go forward is when you can get into the technical elements of the product and explain exactly how it works. Otherwise, you're just going to bamboozle them, confuse them and they're going to feel like they're being sold to.

Speaker 1 33:02

The other thing I wanted to touch on was stories. I thought Ollie's example of stories was really good, and he mentioned how you know you'd be sitting in the pub for five minutes or so and you'd very quickly come across someone who's either had cancer or someone who knows, someone who's been out of work for a significant amount of time. I think I've got several examples of people I've spoke to recently that have been out of work for a significant amount of time. So I think one of the things to do here is to use stories. Stories are a very powerful way to make something human and real. It gives context to what you're talking about, and so, naturally, use examples of people you've known or even that the customer has known. And if you're struggling to find examples, well, we've got the perfect set in the form of seven families. So if you can't find examples from you or your client to use, why not lead into the seven family stories and demonstrate the importance of either having or not having income protection, as the case may be, using those practical examples, and even share those videos with your customers so they can see the impact of it? And then, finally, prioritization. For me, this was the biggest change in my career when I understood how to prioritize protection properly. It really was a liberating and eye-opening experience.

IPTF News and Outro

Speaker 1 34:04

Now Ollie explained in the interview how, as a business, they would rather their advisors get their customers to take some form of income protection over anything else. To them, that is the number one product, because having income in the bank to be able to pay those bills is more important than taking a life insurance product where there's a very low risk of you actually passing away. That's not to say life insurance isn't important, nor critically honest they are. Of course they are, but I would argue that they sit underneath income protection in terms of priority, because if you haven't got an income, how can you even pay for those products in the first place? And so knowing how to prioritize for me is one of the best ways in which you can enter your conversations with a much greater degree of confidence and demonstrate to your customers that you know what you're doing, why you're doing it and helping them to prioritize as well. By helping your clients to prioritize correctly is going to empower them, educate them and give them the means to make the right choices, informed choices, and in doing so, they are more likely to want to take income protection by understanding the value it offers them over those other plans. So, generally speaking, if you don't know how to prioritize, just let me know. Give me a shout on hashtag IPTF, and what I'll do is I'll send you through a prioritization model that I use in my coaching sessions. That really does help advisors understand how to do it properly, how to prioritize correctly, and will give them so much more confidence. Hopefully, those tips have been very useful for you today, today. Right, that is everything for this week.

Speaker 1 35:30

If you did enjoy today's episode, which I hope you did, please do shout about it. Obviously, share the IPTF posts, send us a voice note on WhatsApp or just share it around your company. Everything you do is going to help spread the vital knowledge of IP and get this podcast out there Now. As a reminder, you can now register for iPore 2024, as mentioned at the beginning of the show. These webinars are jam-packed full of incredible content and, trust me, they are not ones to miss, especially yours truly. All the links to register in the description of today's episode. If you've not done that already, please go and sign up now, guys, you will not regret it. And let's talk. Ip is produced and edited by c studios. Executive producers are joe miller, andrew wibberley and vicky churcher, and, as always, I'm matt chapman. Empower yourself, empower your clients and let's talk ip.