About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Tuesday, January 21st, 6:17PM
Latest Headlines

Opinion: Think big for risk

Over the years I often see stats that show more people own life insurance than disability insurance. I had not thought, until recently, to ask why – duh.

Tuesday, December 2nd 2008, 5:04AM

by Russell Hutchinson

While you might have reasons good enough for you, I’ve discarded the obvious “It costs more” – as plain loopy. You get more money back (ask an insurer that is more profitable), you are more likely to claim – because lots of things that will keep you off work won’t kill you – and most consumers can spot that.

So, just a little less innocently, I asked the hard question: “Why is this?”

There may be a good explanation – people are comfortable with smaller risks but very unhappy about big ones. I owe this revelation and some great research background to Brian Lenehan of Asteron. Milton Friedman did some fascinating work on this, and he didn’t have the commission incentive you do.

Turning to the practical implication of this work of genius, in selling risk: make the sums large. This is counter-intuitive. We tend to think of our income in paycheck sized chunks. The finance companies work out the payments on HP to weekly – everyone else wants to make it sound small.

But when selling income protection, we should revert to an old fashioned argument and show the client how “You will earn a fortune”. That’s a sales tool which helped people work out how much they will earn in the balance of their working life.

Then focus on showing the client the large, even catastrophic risks associated with losing that income. Anything less leads them to the conclusion that risks to their income may be only small and episodic, and therefore manageable without any cover.

« Opinion: A question of coverageOpinion: Insurance makes you feel wealthy »

Special Offers

Commenting is closed



Printable version  


Email to a friend
Insurance Briefs

Southern Cross launches advisory group
Southern Cross Health Society has announced the establishment of a Māori governance advisory group in a first for New Zealand’s health insurance sector.

HealthLink and Konnect NET to merge
Healthcare technology companies HealthLink and Konnect NET are merging.

Fidelity scores top award for third consecutive year
Fidelity Life has been named 2019 Life Insurance Company of the Year by ANZIIF for the third consecutive year.

Suncorp invests in wellbeing
Suncorp New Zealand has now invested a total of $20 million into wellbeing bonds as part of its focus on identifying sustainable investment opportunities that can deliver positive community outcomes.

News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by Web Developer and eyelovedesign.com