What do you cut when something has to give?

Perhaps the starting point is the so-called ‘ideal’ package of cover and the client has revealed a substantially smaller budget. Maybe a client has had a bad year and now needs to reduce their insurance package. Or finally a 14% annual increase rate in rate-for-age premiums has caught up with a client now in their early fifties and after swallowing it for 15 years they are finally calling to tell you to cut it down.

You have tried to conserve it entirely as is, but pretty soon you may just be glad the client trusts you enough to have the conversation and not quietly cancel the direct debit and take out a little cover somewhere else instead.

Clearly, having an organised view of priorities is a great place to start. I have seen advisers almost come to blows over whether medical insurance was more important than income protection – so I certainly will not dictate to you what the answer is, but you must develop a strategy so you can give coherent advice and rationale for the approach you take. One example I have seen works like this.

First they check the client’s financial situation – if there is cash at hand or access to reasonable credit headroom then push out all the excess levels and wait periods. Lots of clients can save a lot by going from a nil excess to $1000 and going from four weeks wait to 13 weeks.