The cost-of-living crisis is piling pressure onto household finances and is dominating the headlines.

Soaring energy, fuel, food and other costs, combined with several interest rate rises in recent months, have all started to bite.

Protection is even more necessary in these tough times

That may make it harder for protection advisers when engaging with customers, and even poses the potential for some existing customers to consider cancelling their cover. With even steeper bills on the horizon as winter looms, many will be weighing up where they can cut costs and whether protection is one they can really afford.

It will therefore be all the more important for advisers to impress on customers that this should only ever be seen as a last resort.

We have noticed an uptick in customers considering cancelling cover and there’s every chance this trend will continue as the year progresses and higher energy price caps kick in. We have long focused on engaging with these customers and this is an approach that will only grow in importance.

These conversations must take place with existing customers as much as with new ones

Positively, many customers have been willing to keep cover once we reminded them of the reasons they took it and the difference it could make. Of those who really are struggling with affordability, many are open to reviewing their cover rather than cancelling it altogether. That at least ensures they have some sort of safety net should they need it.

More remortgage customers

Having the protection conversation with customers is often harder to initiate on a remortgage. With an expected cooling in the purchase market, that may also mean advisers will need to double down their efforts on protection.

Rising mortgage rates mean the remortgage market is likely to be buoyant as customers seek advice on what will often be higher monthly mortgage costs. More customers are starting the remortgage process earlier, but that has the potential to see them put off the protection discussion until the new deal is finalised.

Our role is to ensure people understand why they mustn’t make a knee-jerk decision and cancel their cover to save on premiums

The lengthier turnaround between making an application and anticipated completion could also necessitate insurers having to renew terms, or customers needing to make new declarations of health conditions. That could prompt people to reconsider their options so it’s all the more crucial that the importance of protection is impressed on customers.

Advisers have a crucial role in explaining why protection is arguably even more necessary during these tough financial times. Highlighting protection as a vital part of the broader financial picture will be all the more important. The need for protection doesn’t disappear if a purchase or new mortgage application takes longer than expected.

Worst-case scenario

Protecting both one’s income and one’s family is likely to be all the more crucial when living costs are rising. Many people would find it even harder to make ends meet if they were unable to work due to serious illness or injury. Protection would provide valuable peace of mind at what’s likely already to be a stressful time.

We are therefore having more conversations about the immediate risk and the potential outcome if the worst-case scenario was to happen now. If a customer sees the need for cover at this moment, why leave that window of risk open until the mortgage completes?

Many customers have been willing to keep cover once we reminded them of the reasons they took it and the difference it could make

Today’s backdrop means it’s all the more important that advisers strike the right chord with customers. Protection mustn’t be seen as something that’s nice to have but an expense that could be removed if money was tight. It shouldn’t be viewed in the same light as people view unsubscribing from a streaming service. Customers need to understand that they are getting a vitally important product designed to help people cope when life throws them a curveball.

Currently, consumers are also less likely to have savings to fall back on, with recent Office for National Statistics data showing that nearly one in four (23%) is ploughing through their savings to help them cover rising bills.

Knee-jerk decision

Our role as protection advisers is to ensure people understand why they mustn’t make a knee-jerk decision and cancel their cover to save on premiums. Instead, we should be encouraging them to consider the true value of cover and showing them ways we might be able to provide this, perhaps at a more affordable level, by being creative with the solutions we come up with.

Today’s backdrop means it’s all the more important that advisers strike the right chord with customers

Those conversations must take place with existing customers as much as with new ones.

L&C Mortgages associate director, communications, David Hollingworth