Total premium disclosure

As the protection industry comes to terms with disclosing the total premium over the life of a contract, or at least ten years’ worth of it, is there any way to turn it into a marketing advantage?

I accept that most industry professionals may not be in the mood to hear this. They will see this regulation as yet another headache created by people divorced from the reality of advising the public in 2011 and that is a reasonable enough point of view.

Most regard the European distance marketing directive as bad law – another unnecessary regulation that could put people off insuring themselves and their families and as everyone knows they often need convincing. Why on earth put another hurdle in the way? It is also patronising because it suggests the public are incapable of multiplication.

The final frustration may be that we are seeing a rule that was intended to make sure people didn’t get ripped off when they insured their car or their house or their koi carp online or over the telephone, being applied to very different and arguably more important sorts of product.

But taking this regulation as it is, can we at least do that typically British thing and make the best of a bad job?

Well, I think there is one point we may be able to push home. If you look at other cumulative figures of what people spend on certain things over a lifetime, perhaps the most successful way this has been used is in convincing people to stop smoking – as in ‘you would save at least a sports car’s worth of money in your lifetime if you quit’.

Adapting this to protection insurance, if we are talking about a lifetime’s worth of insurance and its total cost, is there at least an opportunity to look at how much cheaper it gets if you insure yourself at an earlier age? Having looked at some critical illness quotes for different age groups, I think there is a case to be made. The savings are not insignificant and of course you have the cover for longer.

A conversation with a client could run along these lines. “Over the life of the policy you may pay this. (the potentially off putting part) However, it is very good you are addressing the issue at this age. To insure yourself in ten years time might cost you this.”

You could say it is a protection version of the pensions argument – the earlier you start, the cheaper it is to secure yourself a decent pension income in retirement. It may not be the power of compound interest, but it is the power of more generous underwriting for younger people.

If it was also set within a conversation about some typical numbers for what you spend on other things over ten years or twenty five years, say on your mobile phone bill, or on petrol, that might also help set the figure in context.

I accept, it is not a panacea. It doesn’t make a bad regulation go away. But it might make it better to handle.