Child cover “too sensitive” for advisers to tackle

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A parent can have a bulletproof range of insurance protection, but if they lack the one policy that appears “too sensitive” for advisers to tackle, they could lose everything if their child gets sick.

Richard Dunkerley, Zurich’s head of marketing for life and investments business, told Wealth Professional that child trauma cover is a vital yet inexpensive policy add-on that “perplexingly” has very low penetration because it is often overlooked.

Last year Zurich commissioned a survey of 200 advisers who were active in advising on risk, and discovered that a large proportion rarely or never broach the cover with their clients because of its perceived sensitivity.

This unfortunately means that many parents also never get to decide whether or not child trauma cover should be a part of their insurance portfolio.

“[Parents] can think that they’re insured to the hilt, but if their child got seriously ill none of that protection helps,” Dunkerley said. “They [may] have to take six months off work or longer and for the sake of a perceived sensitive subject their whole financial situation could come crashing down.”

The survey, which sought to discover why child trauma cover penetration was so low, revealed that more than a quarter of advisers hardly ever or never recommended the cover to their clients.

Eight percent of these said they never bring it up because they feel the issue is sensitive, and a quarter said they don’t recommend the cover because some clients get sensitive discussing their child in an insurance environment.

Interestingly, female advisers were far more likely to recommend the cover than their male counterparts.

Whether or not such sensitivity is real or imagined, Dunkerley said there are a number of things advisers could be doing that will make any conversation with a client about child trauma cover easier for both parties.

The first is a shift in the way that the adviser and the client think about who the cover is actually for.

“It’s not really about insuring the child. What this product is really about is insuring the parent’s ability to take some time off and look after their child if they are ill. Any parent would go to hell and back to do whatever they could to look after their child, but normal insurance doesn’t protect against that scenario,” he said. “When an adviser starts thinking in that mind-set, they could approach the conversation more easily.”

Insurers could also put together information or multimedia packages about the cover that can be shown to clients to take some pressure off the adviser when they have that conversation.

Zurich, for example, made a video aimed at parents that highlighted what child trauma cover could mean for them. It was well received and has been one of the company’s most popular videos to date.

 “A video or other material could be used as a way of articulating the points and reducing [the amount] of talking an adviser needs to do about something they themselves feel uncomfortable about,” said Dunkerley.

Online comments in response to Zurich’s video highlight that many risk advisers already feel that child trauma cover is vital and that it is their “duty” to recommend it to clients.

“I always recommend advisers to add $100,000 child trauma cover to the parent's policy as an ‘automatic inclusion’ rather than an optional extra,” wrote one. “Not only is it incredibly beneficial in the event of claim… but there will also be a fantastic opportunity when the child reaches 18 to convert to a "P Plater Protection" policy with no underwriting, thereby giving targeted protection to the 18-21 year old and creating a new client for the adviser.  Best interest of client and best interest of adviser - double whammy!”

Dunkerley agreed and called this potential “the gift that keeps on giving”.

He said every client that has children should be given the opportunity to make a decision about the child trauma cover, and not have the choice taken away from them due to the sensitivity of the issue.

“Fair credit to all the companies making an effort to provide this,” he said.

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  • GT on 19/03/2014 8:41:48 AM

    What a bunch of sooks. Scared of a hard conversation, Then why are they advisers.

  • Mark Thompson on 19/03/2014 10:21:24 AM

    Hi Paul and GT, let's face it unless we work at Mother Teresa's Hospice we are motivated by money, not withstanding how much we want to help clients and many advisers, including myself, feel uncomfortable about dragging kids into a 'sale'. I managed to overcome this discomfort, outlined in my earlier comment. I think it's a bit tough to label adviser sooks etc. when a tough guy like me feels the same way.

  • Steve Greatrex on 19/03/2014 4:12:52 PM

    This is a good feature - but it incepts at age 3!

  • Paul on 18/03/2014 2:50:37 PM

    How can it be that in our industry literally hijacked by formal education & compliance training that there is such an apparent lack of communication, empathy & positioning skills.....do they really need videos for people to understand the financial consequences of the high risk behavior of our younger generations? Heaven help us if this is accurate

  • Mark Thompson on 18/03/2014 2:52:15 PM

    A few years back I went to a 2 day seminar on trauma/dread diseases organised by the Risk Store. Up until then I felt uncomfortable about discussing child cover, unless it was an automatic feature for $10K. After getting a kick up the proverbial, I came away with a new way of explaining 'Time off with Mum Insurance'. It enables mum (or dad) to take time off without pay to be with a seriously ill child. It's not about making money out of child's illness, its about providing quality time. Another factor is that leukaemia is the most common form of childhood cancer and nowadays it has an extremely high rate of recovery. It's an even softer sell when you explain while your child is recovering from leukaemia mum/dad can be there instead of worrying about mortgage blowing out.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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