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The Life Insurance Market
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At the time when LifeSearch began campaigning in February 2009 for insurers to cut premiums when they add exclusions to policies, only BUPA and Fortis offered this service. It's great to be able to say that as the year draws to a close, we can now add five more names to that list:
Now - in addition to Bupa and Fortis - LV=, Zurich, Legal & General and AXA also offer premium reductions on Critical Illness policies when certain conditions such as cancer have been excluded.
For Income Protection, Aviva has joined Fortis in offering premium reductions when certain conditions such as spinal problems have been excluded.
This is great news for the consumer and gives those insurers mentioned above an advantage when it comes to placing business. We want to know when the others are going to follow this truly TCF initiative.
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This New Year, after all the presents have been opened, the food has been scoffed, and the wine quaffed, make sure your finances are fit to cope with the cost of that very merry Christmas to ensure it also turns out to be a happy 2010.
Life insurance continues to see a price war between providers with a continued fall in premiums and consumers could be wasting thousands of pounds by not reviewing their policies, advises LifeSearch.
Remember - the difference between the cheapest and most expensive products can be significant, especially when multiplied over the term of a policy, so check with an independent adviser to see if you can get your policy at a cheaper rate.
Remember - if you have given up smoking for over 12 months, it is worth considering whether to rebroke the policy as you can potentially save hundreds of pounds with a cheaper premium. Although a cheaper premium is not certain, because it is dependent on age and health, nonetheless there is a very good chance that the premium will fall.
It is important to remember that price should not be the only consideration when choosing a Financial Protection product and customers should look for the policy that offers the best value for money. This means looking at the product which most suits individual circumstances and offers additional benefits.
Importantly, if you are going to switch policies, do not cancel your existing policy until the new one is in place.
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As I write this I’m genuinely saddened to learn that the Consumer Protection Insurance Engagement Campaign (CPEIC) initiative aimed at promoting protection has not got off the ground. It would have worked and all would have benefitted, but mostly the consumer. That it has been rejected by providers and reinsurers without any ongoing effort to deliver its intent is a major blow to a part of financial planning that is often woefully under-sold, misunderstood and, from a client POV, dismissed in favour of the glitter of investment or a newly mortgaged home. The efforts of 20 plus insurers’ best minds plus key people working in protection sales could not agree on the best way to promote our products to the public at large and that inability to place personal agenda’s behind the common good is sad fact indeed.
But I ask why they had to take the step in the first place? Who should be taking responsibility for this, hand in hand with the insurance industry? Last time I checked the FSA handbook, part of the mission and remit of that regulatory body was “promoting public understanding of the financial system.” I can’t honestly remember a time when they genuinely did that positively in protection. Of course, they brought in ICOB as a step to monitor and control protection sales better for the interest of the public. But has it worked? No! Clients still don’t genuinely appreciate the difference between buying without proper financial advice, so now we have a market flooded with non advisers, price only comparison internet sites and execution only products. Understanding the value of advice in protecting you and your family from life’s unexpected and tragic calamities is certainly not effectively promoted.
It seems the ABI doesn’t want anything to do with promoting protection either, so, if we can’t look to the industry’s trade body or our regulator, who do we look to? The Government? Not even they are prepared to step up to the plate and do something to educate the public about the shortcomings in genuine protection for themselves, or the State’s inability to properly support them if they did face a financial calamity - such as being off sick long term or a major income earner in the household dying unexpectedly. Surely some of the millions of tax-payer pounds spent propping up banks is worth re-directing to something that could protect the voters better and ease the pressure on the State with a perfectly directed and timed payment? It seems like ‘common sense’, to me, but those two words are perhaps rather out of place in politics and personal finance these days.
With proper sales of protection still in decline, and millions of families across this country unwittingly at risk of financial hardship and, worse, poverty, as a result of poor protection solutions, will none of the powers that be step up to take on this vital task? Why not?
Duncan McMillan
Head of Sales, LifeSearch
This article appeared in a recent edition of Money Marketing
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With the Conservative Party clearly working out how to improve financial services regulation if and when it takes office, it is wise to revisit the basics. When the FSA was set up by the Financial Services and Markets Act 2000, as a consolidation of the previously diverse regulatory bodies, it was given four statutory objectives:
• maintaining confidence in the financial system;
• promoting public understanding of the financial system;
•securing the appropriate degree of protection for consumers
• reducing financial crime by business.
Now those seem wholly worthy goals, but surely it would have been better had the new super-regulator also been charged with encouraging the nation to seek self-sufficiency in savings, pension provision and protection against personal catastrophe?
Perhaps the reason it was not so tasked was that that act was Gordon Brown’s creation, and he and his have always been happy to take the responsibility for such common sense away from individuals and give it to the State. Had it been framed by a Tory, the act would surely have given the FSA duties aimed at directly improving the nation’s personal finances. The fifth objective might thus read:
• encouraging proper personal financial provision.
FSA officials often make clear that while they wish no harm to those of us keen to get people doing more for themselves, they are broadly disinterested in our efforts other than when they might threaten the 4 objectives above. They use carefully constructed cost benefit analyses to show that they are not actually reducing the provision of financial advice by too much, but these are (often shameless) window dressing and, in any event, ignore the screamingly obvious truth that the amount of encouragement of proper personal financial provision available has done nothing but shrink since the advent of the FSA, indeed of regulation itself. Only debt, the opposite of proper personal financial provision, has grown on the FSA’s watch.
Don’t get me wrong, what was offered before regulation was so variable in quality as to be a lottery. The plausible man from Allied Dunbar sold very expensive savings plans, and had to be reformed, but he did sell a lot of them and he did help maintain a savings culture through the spendthrift 1980’s. His replacement, approved and controlled by regulation, has retreated to dealing with those few already self-persuaded to be sensible.
Even this encourager of good behavior, be he IFA or Tied Agent, and huge improvement that he is over the man from Allied Dunbar, is not yet good enough.
So the Tories need to start with the 4 objectives and make them 5, if they are to meaningfully reform the retail end of financial services and not leave it in Brownian stasis. I fear they are focusing on the 1st objective above, perhaps because the current crises of confidence was almost entirely down to Labour Treasury policy and that rightly gives good headlines, but the deeper threat that Gordon Brown’s mendacious tenure has delivered is that savings and protection are no longer seen as the virtuous decision of the common man, but rather the province of the rich. Any more than merely political reform of regulation must change that urgently.
Tom Baigrie
(These thoughts were also pulished in a recent edition of Money Marketing)
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