It is highly likely they would ensure that goose was well protected by keeping it in a safe location, looking after its nutrition and health. Most importantly, they would probably ensure they had a back-up plan, should it fall ill or die.
Income potential
The golden egg is like your clients’ regular income. However, they rarely regard their income as an asset. Often, they consider tangible items such as their house and car as an asset and have protection in place for these. If you ask them to multiply their salary over a period of three to five years, this will likely exceed any asset they own (see Table 1).
Individuals tend to protect their major physical assets but do not always consider protecting themselves. This can be done by insuring the client against the financial implications of critical illness (CI), disability and death. Although critical illness does not cover death, it does provide a measure of immediate financial security.
Changing circumstances
It is important to ask customers what they would do if they lost their monthly income. The Zurich IPG report (2016) revealed that 72% of UAE families are unprotected against loss of regular income.
Failure to protect income in the event of critical illness poses a significant challenge and can be devastating for a family’s financial security. Income falls and expenditure rises at a time when money worries should be the last thing on a person’s mind.
There is a great opportunity for financial professionals to provide holistic advice to clients, covering family protection, saving for retirement, children’s education and other life goals.
By doing so they can protect their client’s financial future should the unthinkable happen. A comprehensive fact find is essential to establish client needs and goals, and it is a great way to ensure you are providing a bespoke recommendation.
From Zurich’s experience, the take-up of life and critical illness cover in the UAE is still far below what is recommended (see Table 2).
Ongoing financial advice in line with a customer’s lifecycle can lead to increased opportunities in recommending further protection and increased sums insured. It is important to regularly meet with clients to review whether their personal circumstances have changed: have they had children, taken out a mortgage, changed jobs or had an increase in salary?
Critical illness cover can also help towards paying off debts such as a mortgage. While it might not cover the full debt, it can help avoid the vicious cycle of having to return to work too soon, which in most instances leads to a further decline in health or a reoccurrence of illness.
A critical illness payout provides financial support to help adequately recover in a debt-free environment, helping to reduce stress levels and increase the choices available in a period of incapacity.
Case study
Richard, 40, and Susan, 35, live in Dubai with their two young children (two and four years old).
While Susan looks after the children, Richard provides their sole income of $130,000 a year.
Richard and Susan’s objective is to protect the family’s key financial goals. The couple has been saving towards their retirement, for their children’s education, as well as other lifetime goals such as buying a house.
They are cost-sensitive and would like the flexibility to be able to reduce or increase premiums in the future. Through a client fact-find, their adviser identified that Richard required $2.6m worth of life cover (approximately 20 times his current annual salary) and $500,000 of critical illness.
Their adviser presented them with the following options using Zurich’s International Term
