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Handling common objections

When asked what would happen to their finances if they were off work ill, a common client reaction is ‘I’ll get by’. But can they really?


What do they spend?

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The family average weekly spend is £572.60. One of the first things anyone should do when considering their financial situation is to go through their household budget. Get your client to fill in a budget planner – when they write it down, the reality starts to hit home.


"I’ll tighten my belt, or rely on my partner"

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The average UK family spend is £572.60 a week – can their partner’s salary cover this over the long-term? The average length of an IP claim at LV= is more than six years – a long time for their loved ones to cover their debt and bills.

It’s easy to assume they’ll help, but have they actually asked their loved ones if they’d be able to support them?


"I’ll just dip into my savings"

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The Money Advice Service (MAS) states that people should have three months’ of outgoings in savings.

If your client losses their income, how long will their savings last? Even large amounts of savings can diminish quickly. And that would be even more painful if they'd hoped to spend that money on the good things in life like a new car or holiday.

With the average family spending £572.60 a week* and only saving £321** each month, it would take 8 years and 4 months to save one year's average UK gross salary.

Even large amounts of savings can vanish in a matter of weeks if they lose their income. Use a budget planner to calculate their monthly spend and divide that by their savings. How long would they last?

Source: *ONS, March 2018 **L&G Deadline to Breadline to report, 2017


"I'll rely on my employer"

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Only 43% of employers offer sick pay above the minimum requirement (which is capped at just over £90 a week). As part of your preparations for a fact find meeting, ask your clients' to bring along their contract of employment and sickness benefit statement.

If your client is the one of the near five million who is self-employed, they’re on their own.

We’ll cover up to 60% of their net profit if they're self-employed. We understand self-employed income can fluctuate, so we’ll look at their last three years' income when working out the maximum benefit payable at claim.


"The state will help me"

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The good news is that the state will give your client £95.85* a week for up to 28 weeks if they can't work due to ill health.

Unfortunately not everyone is eligible for Statutory Sick Pay – it’s only available for people who are employed. With the average family in the UK spending £60.60* a week (in 2018) on food and non-alcoholic drinks alone, this is unlikely to cover all other monthly expenses.

What happens after the 28 weeks of Statutory Sick Pay?

After the 28 weeks and if your client is still off work due to ill health they could be entitled to Employment & Support Allowance. Unfortunately for them, they’ll need to navigate through a complex and lengthy application process – the Employment & Support Allowance (ESA) form runs to an exhausting 23 pages. They also have to undergo a stringent series of assessments about their ability to do any work – around a third of ESA applicants get some form of ESA benefit. For those who are ‘successful’, benefits provide basic support – the maximum ESA payment is now £113.55 a week (and under £75 during the assessment phase).

For more information on the full state benefits available to your client go to www.gov.uk.

The figures used don't take into account any temporary or short-term changes.

**ONS, Family spending in the UK: April 2017 to March 2018


"I'll take out credit"

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With interest rates still at low levels, credit is easier to secure. The average household debt in the UK is £57,943 (including mortgage repayments). While your client might be able to use their credit card limit to cover their expenses, for many this wouldn’t be a long-term solution and could make their situation worse as they’ll be deeper in debt.

So, if your client or their partner were to be off work ill for a time, the prospects of ‘getting by’ seem bleak for many. But, help is at hand…


"Income protection doesn't pay"

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At LV= we always aim to pay claims where we have had a full medical disclosure. Usually, the only claims we cannot pay are where someone hasn’t been entirely honest about their medical history or where their reason for claiming is not supported by the medical evidence provided when they claim.

But we go to exceptional lengths to try and prevent this from happening. In 2018 we paid 95%* of all our Income Protection claims.

*95% of Income Protection claims were paid in 2018, this includes new claims admitted in 2018 and those already in payment before 1 January 2018 that continued to be paid in 2018. We paid 87% of Income Protection claims admitted in 2018.

Check out the 7 Families videos for a reality check on the real risk of long-term sickness.

FOR UK FINANCIAL ADVISERS ONLY
LV=, County Gates, Bournemouth, BH1 2NF, UK