The protection gap: how to spot the client who's underinsured

The protection gap is the distance between what a household would lose financially if something went wrong and what they have actually put in place to cover it. It is one of the most common gaps in a person's finances, and it is almost never visible to the client themselves. People tend to assume they are covered because they once bought a policy, or because their employer mentioned a benefit, or simply because nothing bad has happened yet.

As a professional working alongside these clients, you are not being asked to assess their cover or calculate what they need. That is the job of a regulated adviser. What you are well placed to do is notice the situations where a gap is likely, and recognise that the moment has arrived to introduce them to someone who can help. You are the person who spots the trigger; the vetted, regulated advice firm is the one who acts on it.

Protection needs change every time a client's life changes, and those changes surface in your work long before anyone thinks about insurance. Watch for the client who has recently taken on a large financial commitment, or whose family circumstances have shifted, because their old assumptions about cover no longer hold.

• A new mortgage or a significantly larger one, where the debt now outstrips any existing policy
• The arrival of a first child, or a second, adding years of dependency
• A move from employment to self-employment, stripping away sick pay and death-in-service cover overnight
• A partner giving up work, leaving one income supporting a household built for two
• A business owner who is personally central to the firm's survival but has never insured that risk

None of these is a niche event. They are the ordinary milestones that pass through an accountant's, solicitor's, broker's or consultant's caseload every week.

Clients often describe their own exposure without realising it. The language is casual, but the meaning is not. When you hear a version of these, treat it as a prompt rather than a passing comment.

• "We'd manage somehow if anything happened."
• "I think I had something through my old job."
• "I've been meaning to sort that out for years."
• "My partner doesn't really need cover, they don't earn as much."
• "We put everything into the deposit, so there was nothing left for the extras."

Each of these is a client telling you, in plain terms, that they have never had their protection properly reviewed. You do not need to probe further or offer reassurance about what they should do. The right response is to recognise that this belongs with a specialist and to say so.

It can be tempting, once you have spotted a gap, to offer a view. Resist that. Working out how much cover a household needs, which type suits their circumstances, and how it should be structured is regulated advice, and getting it wrong carries real consequences for the client and for you. Your value here is precisely that you are not trying to advise. You are trusted, you are close to the client, and you have noticed something that matters.

The most useful thing you can do is frame the handover simply and without alarm. Something as light as observing that their circumstances have changed and that it would be worth having their protection looked at by someone who specialises in it is enough. The client keeps their trust in you, and the detailed work goes to a firm equipped to do it properly.

Once you have decided to refer, the mechanics matter less than the timing. The strongest introductions happen while the trigger is fresh, when the client is already thinking about the change in their circumstances. A gap you notice today and mention today lands far better than one you file away for a future review.

Through a referral network, that introduction is straightforward: you pass the client to a vetted, regulated advice firm, the specialist takes the conversation from there, and where it leads to advice the client takes up, you receive a share of the resulting fee, typically a 60-70% member share. You have not stepped outside your own expertise for a moment. You simply saw the protection gap that the client could not see, and connected them with the people who could close it.

Make a habit of it. The professionals who benefit most from spotting these moments are the ones who treat protection as a standing part of how they read a client's situation, not an afterthought that surfaces only when someone asks.