1. Bright Grey is part of the Royal London Group A roadmap to protection success Robin Carr Head of Adviser Development July 2014 1 For advisers only

2. Bright Grey is part of the Royal London Group 2 Key Learning Outcomes Understand why an analysis of capacity for loss should include considering factors such as the client’s future health and well being. Understand how to develop an action plan to optimise your approach to discussing protection with your clients. Understand the potential problems caused by intestacy and probate delay and how to avoid these in protection planning. Understand how to mitigate the effects of possible IHT liabilities on protection proceeds. Understand the importance of planning for the guardianship of dependent children and the particular issues faced by unmarried couples

3. Bright Grey is part of the Royal London Group The protection conversation Can you afford not to? “TCF, with its focus on consumer outcomes, is central to our work in ensuring a fair deal for consumers. It underpins the delivery of our statutory consumer protection objective and the future objectives of the FCA.” A firm must pay due regard to the interests of its customers and treat them fairly. FCA Principle 6 3 Source: Financial Conduct Authority, May 2014.

4. Bright Grey is part of the Royal London Group 4 “...fined £1.8m over investment advice”...FT 13/9/13 “ Between 15/9/10 and 30/4/12, (they) failed to ensure that sales advisers adequately considered whether customers were able financially to bear the risks associated with the investment products recommended to them (capacity for loss)”...FCA 12/9/13 An example

5. Bright Grey is part of the Royal London Group An example 5 “Consider non-financial issues that affect a client's capacity for loss including lifestyle and well-being, which could also impact on a client's ability to withstand losses”. “...published a five point plan to help advisers discuss capacity for loss with their clients”... New Model Adviser 7/1/13

6. Bright Grey is part of the Royal London Group Moral obligation To your clients and their families Duty of care or moral obligation? Do you know your client’s attitude to risk when it comes to sickness, disability or premature death? Do they know the chances of dying, having a critical illness or long term incapacity – can you tell them? Who else talks to people about this? How would you feel if your client’s family lost it all? What might it mean ….. 6

7. Bright Grey is part of the Royal London Group The killer phone call You arranged our mortgage last year, my wife has just died. What’s our position? My husband had a heart attack at the weekend, he won’t be able to work for the foreseeable future – we need to access some of our investments My wife has been diagnosed with breast cancer. We’ve got 3 young children... I’m off sick. I’ve just found out my employer will only pay me for 6 months... You never want to take Why didn’t I recommend protection? 7

8. Bright Grey is part of the Royal London Group Roadmap to protection Your protection audit 8 Income protection Lifestyle protection Critical illness cover Mortgage protection Business cover/RLP Client ANo YesN/a Client BNo Yes N/a Client CYesNo Yes Client DYes More in a while

9. Bright Grey is part of the Royal London Group Roadmap to protection Your protection audit 9 Income protection Lifestyle protection Critical illness cover Mortgage protection Business cover/RLP Client ANo YesN/a Client BNo Yes N/a Client CYesNo Yes Client DYes MeYes Do you believe?

10. Bright Grey is part of the Royal London Group Process Existing process – does it specifically incorporate the protection sale? Does your fact finding support the protection discussion? If driven by mortgage – is the protection sale a separate meeting? How quickly can you respond to opportunities? Does yours support the protection sale? 10

11. Bright Grey is part of the Royal London Group Skills and knowledge Filling the gaps 11 The customer need Painting pictures

12. Bright Grey is part of the Royal London Group Magic circle Personalisation 12

13. Bright Grey is part of the Royal London Group Magic circle What you’ll find 13

14. Bright Grey is part of the Royal London Group Magic Circle 14 Sales Aids

15. Bright Grey is part of the Royal London Group Skills and knowledge Filling the gaps 15 The customer need Painting pictures What happens when someone dies?

16. Bright Grey is part of the Royal London Group Problems on death Delays in winding up the estate due to probate No immediate access to funds, inability to meet day to day bills Limited state support* –Tax free bereavement payment of £2,000 –Bereavement allowance of between £33.36/wk and £111.20/wk (depending on age) for 52 weeks –Widowed parent allowance is a maximum of £111.20/wk payable whilst receiving Child Benefit Changes to bereavement payments are proposed Commenting on the proposed change Childhood Bereavement Networks** says “ We estimate that around 90% of new claimants with children will be worse off ” What your client’s family could face 16 * Source: www.gov.uk - July 2014 ** Source: Childhood Bereavement Network July 2014

17. Bright Grey is part of the Royal London Group Skills and knowledge Filling the gaps 17 The customer need Painting pictures State benefit entitlement on illness What happens when someone dies?

18. Bright Grey is part of the Royal London Group Statutory Sick Pay (SSP) Employer has to pay SSP* after a “period of waiting” – usually 3 days SSP amounts to £ 87.55/wk (as from April 2014)) SSP is payable for a maximum of 28 weeks Paid by employer What does this mean for a client on £40,000 pa Use a salary calculator to demonstrate to client the income drop they face (eg www.moneysavingexpert.com/tax- calculator) Minimum employer obligation 18 Source: www.gov.uk – July 2014www.gov.uk

19. Bright Grey is part of the Royal London Group 19 Drops by nearly 85% if reliant on SSP

20. Bright Grey is part of the Royal London Group What happens then After 28 weeks switches to Employment & Support Allowance Claim form is 52 pages long! If the claim is accepted, the claimant goe into the “Assessment Phase” lasting 13 weeks Benefit during the 13 weeks is £72.40/wk for over 25s Once assessment has taken place........ Do things get better? 20 Source: www.gov.uk – July 2014www.gov.uk

21. Bright Grey is part of the Royal London Group After assessment phase Fit for work Placed in Work Related Activity Group (WRAG) (£101.15 pw) Placed in Support Group (SG) (£108.15 pw) Of the Employment & Support Allowance claims made April to June 2013** –28% have had an outcome –39% have had their claim closed prior to face to face assessment –33% of cases are still ongoing Of those where there has been an outcome** –69% were entitled to benefit (51% in SG, 18% in WRAG) –31% were judged “fit for work” Three possible outcomes 21 *Source: www.gov.uk – July 2014 ** Source: DWP Report Employment and Support Allowance: outcomes of Work Capability Assessments, Great Britain 27/3/14www.gov.uk

22. Bright Grey is part of the Royal London Group Skills and knowledge Filling the gaps 22 The customer need Painting pictures Wills, trusts and guardianship agreements State benefit entitlement What happens when someone dies?

23. Bright Grey is part of the Royal London Group The Good Parent Portfolio What’s it all about? 23

24. Bright Grey is part of the Royal London Group The Good Parent Portfolio The job of a protection adviser is to Highlight the importance of protection Establish the protection needs Establish a reasonable budget Create a tailored solution Treat the customer fairly. Protection - a closer look 24

25. Bright Grey is part of the Royal London Group The Good Parent Portfolio If you’ve sold your clients a life policy, can you: Guarantee the proceeds won’t end up in the estate of the deceased? Guarantee that the deceased will have a will when they die? Two questions 25

26. Bright Grey is part of the Royal London Group The Good Parent Portfolio Can you be certain what will happen to the life cover if it pays out? Can you guarantee the clients will have an effective will when they die? Do your clients understand what happens to their life cover if it’s subject to intestacy? Do you understand the intestacy rules? Wills – a closer look 26

27. Bright Grey is part of the Royal London Group The Good Parent Portfolio Intestacy rules – Scotland 27

28. Bright Grey is part of the Royal London Group The Good Parent Portfolio Intestacy and what it could mean for your clients 28 Segway chief leaves £290m Tragic Segway scooter tycoon Jimi Heselden left a fortune of £290 million – but NO will... thesun.co.uk, 13 January 2011.

29. Bright Grey is part of the Royal London Group The Good Parent Portfolio Guardianship – the issues 29 Remarkable survival of siblings, 4 and 19, who escaped fire that killed their mother and brother... 1 Dad killed himself in Morocco 3 days after wife died on holiday... 2 Miracle survivor: Baby left an orphan when family died in Mecca crash is back home... 3 Little boy orphaned as parents die in freak lorry accident at low bridge... 4 Dailymail.co.uk, 1 June 2012. Themirror.co.uk, 19 February 2013. Thesun.co.uk, 27 February 2013. Themirror.co.uk, 10 February 2011.

30. Bright Grey is part of the Royal London Group The Good Parent Portfolio What happens to the children if both parents die? Can you guarantee that your clients won’t die together (or soon after each other)? Do you understand how guardians are appointed? What happens if the mother dies and the parents weren’t married? Guardianship – a closer look 30

31. Bright Grey is part of the Royal London Group The Good Parent Portfolio Unmarried couples 31

32. Bright Grey is part of the Royal London Group The Good Parent Portfolio Trusts can Help protect your clients’ life cover from –Probate delay –Intestacy problems –Paying too much inheritance tax Provide control for funds to be managed for young children. Trusts – 3 very good reasons 32

33. Bright Grey is part of the Royal London Group The Good Parent Portfolio 33

34. Bright Grey is part of the Royal London Group The Good Parent Portfolio Showing that you’re treating your customers fairly Giving holistic protection advice Establishing your credentials as a protection adviser Ring-fencing your advice and encouraging business to stay on the books Creating long-term protection clients Creating opportunities to generate new business. The benefits for you 34

35. Bright Grey is part of the Royal London Group Protection Plan in Trust Trusts – right money, right hands, right time 35

36. Bright Grey is part of the Royal London Group The Good Parent Portfolio. Inheritance tax – treasure for the treasury 36 Source: National statistics online, UK inheritance tax receipts 2013/14.

37. Bright Grey is part of the Royal London Group The Good Parent Portfolio If the policy is jointly owned by a married couple and only one dies, there’s no inheritance tax (inter-spouse exemption can be used). But... Inheritance tax – possible implications 37

38. Bright Grey is part of the Royal London Group The Good Parent Portfolio The policy is owned by only one - not both - of the couple It’s jointly owned by an unmarried couple It’s jointly owned and the couple die together or soon after one another. Inheritance tax – there could be tax to pay if... 38

39. Bright Grey is part of the Royal London Group The Good Parent Portfolio Trusts – right money, right hands, right time 39

40. Bright Grey is part of the Royal London Group The Good Parent Portfolio This isn’t a problem if the policy is jointly owned and one dies But there could be a problem if There’s a single owner with no will Or both joint owners die, and the last to die has no will. Intestacy and what it could mean for your clients 40

41. Bright Grey is part of the Royal London Group The Good Parent Portfolio Trusts – right money, right hands, right time 41

42. Bright Grey is part of the Royal London Group The Good Parent Portfolio Probate delay and control 42

43. Bright Grey is part of the Royal London Group Probate delay And control Questions you might get asked Yes £250,000 I don’t know! Are we covered? How much for? When can I have it?

44. Bright Grey is part of the Royal London Group Protection Roadmap A full checklist 44 Existing clients Current process Fact finding questions Client communications Website Review dates State benefits Wills/trusts/guardians Provider materials Objection handling Perceived compliance issues Optimising menu? Disclaimers?

45. Bright Grey is part of the Royal London Group The Good Parent Portfolio Your business plan Have a look at our Good Parent Portfolio pack and trust toolkit Adopt the Good Parent Portfolio as holistic advice Adapt to your business Technical support available: www.brightadviser.co.uk/gpp Summary 45

46. Bright Grey is part of the Royal London Group 46 Key Learning Outcomes Understand why an analysis of capacity for loss should include considering factors such as the client’s future health and well being. Understand how to develop an action plan to optimise your approach to discussing protection with your clients. Understand the potential problems caused by intestacy and probate delay and how to avoid these in protection planning. Understand how to mitigate the effects of possible IHT liabilities on protection proceeds. Understand the importance of planning for the guardianship of dependent children and the particular issues faced by unmarried couples

47. Bright Grey is part of the Royal London Group Thank you 47