Case Study: A failure in articulating value
This week I will detail a recent exchange with a client that bothered me for days.
I helped a young couple place their first mortgage protection policy for the draw down of their new home. They were referred by a parent and had been advised by that parent to take out more cover than was required by their lender because they were young and it was quite affordable. I explained (or so I thought!) the benefits and the difference between the basic cover and their more comprehensive plan. They took the policy and got the keys to their home.
Fast forward 2 years and one of the couple phoned to say they would like to cancel their policy as their bank offered a less expensive policy. I asked a few questions, as we have access to the policy they were offered, and wanted to know how they could have a better price -turns out the clients signed up for a policy with less than half of the cover we placed, with no conversion option for future cover. The difference was hundreds of thousands in cover.
The client had no idea what their policy offered and only knew the monthly premium. I was floored -in my optimistic mind, all of my clients understand their policy and know their benefits without having to pull out their policy.
During the exchange with the client, they actually said “I’m afraid to say how cheap our new policy is” because they were polite and really thought I had been severely over charging them !! I was so bothered that I bored my husband when he was home from work about the situation. If they had phoned to say they were reducing their cover to save premium, the conversation would have been different as they would have understood they were giving up benefits to suit their budget -and is absolutely okay to do when necessary.
There are two issues here:
1. The bank/adviser gave poor advice and should be far more careful when suggesting a replacement of cover. (not all operate the same, this is not a broad sweeping criticism).
Should one of the clients develop health issues and no longer qualify for cover, they have lost a lot of benefit in terms of how much life cover they will have in place AND they will not be able to extend the term, losing all benefit when the term ends.
2. I need to drive home (better) that price is not the most important consideration when placing protection, VALUE matters.
What benefits do you receive in exchange for the cost? What specific features apply to you and your family? When lining benefits up side by side, what is the best premium available?
I had little remuneration to lose by their cancelling the policy, I was bothered by the feeling that I had failed to do my job properly at policy inception. Why didn’t they know that the policies were vastly different? How can I prevent this confusion?
Be engaged, it will benefit you in the long run to understand what you’re getting, what other options are available and how these benefits apply to you and your family.
If your adviser doesn’t provide much detail, ask ! We can often use too much jargon or assume you understand certain features -but any good adviser will be happy to stop and break down the details.
Queries regarding the above? Contact me anytime.
Rachel O’ Shea, Senior Consultant & Protection Manager