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Protection must offer more than just peace of mind

Published: 10/01/2023

During the cost-of-living crisis, delivering clients immediate value – as well as financial protection for when they might need it most – is more important than ever, writes Andy Philo, Director of Strategic Partnerships for Vitality.

After recent years in which we witnessed a global pandemic and a series of countrywide lockdowns, 2022 provided its own set of challenges.

As we enter 2023, the UK faces an ongoing cost-of-living crisis. With inflation continuing to rise, interest rates increasing and energy prices rising to all-new highs, people’s budgets across the country are getting squeezed this January.

All this presents a real challenge for advisers as consumers look to cut costs where possible. Others will be reluctant to commit to new financial obligations.

“Advisers are today faced with the difficult task of encouraging clients to take out enough cover at the most affordable price, alongside ensuring clients who do have protection keep it in place,”

- Andy Philo, Director of Strategic Partnerships, Vitality

We, as an industry, fully recognise the benefits of having protection in case should someone be diagnosed with an illness or, worse, in the event of death. However, this isn’t always as clear to consumers. That is why it is so important that we deliver value from day one, not only at the point of claim.

More than just peace of mind

While we often talk about the peace of mind that having a protection policy in place provides at a time of need, unfortunately that’s unlikely to be enough for some clients. Financial advisers will need to work harder to demonstrate value in the current climate.

In the sector, we often talk about the need to start talk about the tangible value can people get from these products – now, more so than ever, is the time to do so.

At the point a client takes out protection, it goes without saying that they see the benefits of having that protection in place. But the truth is that if we don’t regularly engage with them, any power of the advice that was originally given may subside over time – or might get forgotten completely, particularly as finances are put under the microscope.

Tangible value

The problem with traditional insurance plans is that too often they get bought and forgotten about until a claim needs to be made. Clients might see their monthly premium come out of their bank account and struggle to remember why they need it. Especially at a time when many households will be looking at their bank account to see where cuts can be made. If a client feels like they can’t live without something, they are much less likely to question the monthly charges on their bank statement.

Providing your client with a protection product which becomes part of their daily life helps them see the value of the product. Not only does this help you provide a solution which meets their financial protection needs, it also helps clients to improve their health, pay lower premiums and savings of hundreds of pounds each year.

Better health

The benefits of better health are obvious but the additional value that taking steps to achieve this go beyond this with rewards like cinema tickets, cashback on healthy food, free coffee, discounts on holidays and lower premiums. To put this into context, in 2021, engaged Bronze members saved 23% of their annual insurance premium on average through rewards. This increased to 62% for Platinum members (our members who engage most with their plan)1.

These savings come from ongoing engagement with their plan and in 2021 Vitality members carried out 378,000 health assessments, 1.2m healthy food purchases from Waitrose & Partners and 815,000 mindfulness sessions as well as 1.7m gym workouts and 60,000 discounted activity trackers. Other rewards included handcrafted 4.1m Caffe Nero beverages, 65,000 discounted pairs of sports shoes and 2.5m Rakuten TV vouchers.

Different conversations

This enables advisers to have very different conversations with clients about their budget both at point of sale and throughout the life of the policy. Not only are clients more likely to see the value of the product and engage with it, they are less likely to cancel it.

In addition, advisers are able to help them to support their lifestyle while providing solutions to meet their needs. Benefits include better health, extra perks and savings of hundreds of pounds each year. Adding to this, your client can also lower the cost of their premium, giving them even more reason to engage.

Opportunities for advisers

At Vitality, our data shows that members who are engaged in the Vitality programme are not only healthier and means less likely to suffer a serious illness as a result. They are also less likely to lapse on their policy. More engaged clients are also more likely to participate in annual reviews. Not only does this ensure their plan is kept up to date but also offers advisers more opportunity to upsell or cross-sell products, as well as build relationships.

With protection insurance offerings evolving, financial advice has needed to become less transactional, and this has paved the way for longer and more loyal client relationships. While meaningful client relationships have always been built over time, this is truer now than ever before.

Protection is needed more, not less

Recent years have shown us just how difficult it is to plan for the unexpected – and this can be a very strong proof point for clients – the Coronavirus pandemic took the majority by surprise.

With many clients facing financial pressures at present, cancellations are not good for anyone involved. However, many clients are acutely aware of their vulnerability these days – both physically and financially – but they might just need reminding. This, alongside the immediate value on offer, could be what stops them from leaving themselves exposed at the worst possible time.

Andy Philo: Three minutes with COVER

Andy Philo recently joined COVER in their studio to explore why immediate value in protection matters more than ever during the cost-of-living crisis.
Watch on YouTube
Find out more about Vitality’s unique approach to financial protection alongside a host of wellbeing benefits and how you can deliver tangible value to clients from day one.

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1 Vitality Claims & Benefits report 2022