A 'demands and needs' letter or statement is a document commonly used in the insurance industry.
Its primary purpose is to clarify the specific requirements and priorities of a customer when buying an insurance product. It ensures that the product provided aligns with the customer's unique circumstances.
Breaking down the terms:
- Demands. This refers to the precise requirements and features the customer wants in an insurance product. For instance, a customer might 'demand' an income protection policy that offers cover in the event they become unable to work due to a prolonged illness or disability.
- Needs. This captures the broader reasoning behind why a specific feature or coverage is essential for the customer. In the context of the income protection policy above, the need might be that the customer is the primary breadwinner in their household, they need the policy to ensure their family's financial stability if they were unable to earn an income.
The demands and needs statement stands as evidence that the broker has considered the unique circumstances of the customer. In the income protection example, that could involve assessing the customer's job risks, family obligations and financial commitments. By doing so, the broker ensures they're offering a policy tailored to the customer's actual needs, demonstrating due diligence and a commitment to the client's best interests.
As with all insurance policies, conditions and exclusions will apply.