Auckland-based broker Sam Kodi says income protection is the most misunderstood insurance product and one of the most important products because “your income is your greatest asset.”
Kodi said that when he sits down with his customers he doesn’t talk about insurance products. He talks about their lives, what they do and what they need to do to protect it: their income, their family and their health.
He said general conversations about their lives get better results because he isn’t selling products and benefits, but customising their cover to meet their lifestyles.
There’s a real lack of general financial literacy in New Zealand, and in particular, a lack of knowledge on income cover. While often more expensive than other life and health products, Kodi said once he explained why income cover is necessary, his customers take him up on this advice.
“Once I’ve explained it, that your income is your greatest asset, people get it,” he said.
Recently, he was referred a family that had bought $2 million worth of life insurance online, $1 million per parent “because they thought that was the right thing to do.”
The couple does have children, has a good combined income of over $200,000, $300,000 in savings (no mortgage) but no trauma or income protection.
“What happens if that $200,000 (income) goes away?” Kodi asked.
Not everyone needs life insurance and the amount is dependent on your specific circumstances. Kodi said the couple had simply selected $1 million online from a dropdown box because it sounded right - other options included $250,000 and $500,000. They were paying about $200 a month in premiums for that life cover.
He added that the lack of awareness on income cover is the most challenging part of being an insurance broker. The best part, however, is getting it right for a family, and getting them the protection they need.
“I treat my business like a family business, and my customers are an extension of my family,” he explained. “I get 100% of my business from referrals. My goal for 2018 is to continue building long lasting relationships with my customers.
“Advisers will always be relevant, robo (digital) advice is not going to replace an adviser. Who is going to fill out the (claims) forms when you’re in hospital?”
Claims management is also essential to the customer experience, Kodi added.
He said when things go wrong, you want an adviser that has your back in discussions with insurers, who is fighting for you – and you won’t get that from an online experience, he noted.
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