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The Life Insurance Market
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Aviva is introducing premium reductions when Cancer or Multiple Sclerosis exclusions are added to one of its critical illness plans.
This means customers who have Cancer or MS excluded as a condition from their policy (and therefore cannot claim if they are subsequently diagnosed with one of these conditions) will have their premiums reduced.
Aviva is the latest insurer to begin this initiative. Bupa were the first insurer to offer premium reductions for exclusions and were followed by Fortis, who extended it to Income Protection products too, when they joined the market in July 2008.
Since LifeSearch began campaigning for all insurers to follow suit last February LV=, Legal & General, Zurich, Axa and now Aviva have begun their own offering. Aviva also offer premium reductions for spinal and mental health problems on their Income Protection policy.
It is good for consumers and good for the industry as it reduces number of policies 'not taken up.' Aviva and all the other insurers taking part in this consumer-friendly initiative are to be applauded. When will the rest catch up?
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There have been 2 rate changes so far this year - Aegon and Scottish Provident.
The total number of rate changes in 2009 stands at 51.
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2010 is a huge year for financial services; for we can expect new leadership to arrive after the general election, and we certainly need it badly. A new team is preparing to take over the Treasury and they will now be working out just what direction they want our vital service industry to take on their watch.
I have no idea how much big picture stuff the Tories have done in terms of deciding their best approach to retail financial services regulation, but I suspect little, for the understandable reason that if they get the macroeconomic regulation picture wrong, the rest won’t matter much. However Mark Hoban MP has been in charge of the shadow financial services brief for a long time now and is at heart a de-regulator and a supporter of enterprise and small business over rulebooks and bureaucracy. So we can hope for a positive approach, though one cannot overestimate the swamp like nature of change management on a governmental scale.
Mark spoke recently at a Conservative Intelligence Cicero Consulting briefing and explained clearly that he would not be prescribing anything to the FSA about their retail or RDR brief at all. This I was later informed is clear code for, “I have much work to do in this area, but if I say anything at all I open myself to infinite questions I can’t answer yet!” If my interpreter was right, that seems a wise enough approach, and one imagines the lobbyists are thus hard at work. We IFAs are fortunate in having one of the best such in AIFA’s Chris Cummings, but on the very long shot that busy politicians read columns in Money Marketing let me urge Mark to make a simple, but far-reaching reform to the way Financial Services is regulated.
That change, and I know dear reader you will agree, is that the FSA should, to complement their Money Guidance effort, be required by their political masters to ask, before starting any new regulatory initiative, whether it will increase the amount Britons save, or invest, or protect. And if the answer comes back ‘No, not in the short term…”, then, no matter what they say after that, they should be asked to think again, before even raising their concerns in public.
Under the current Treasury the FSA has been encouraged to follow a path of perfect consumer risk reduction. They have dramatically reduced the risk of pension trustee malfeasance by unintentionally ending the final salary regime through increased regulatory burden; they have ended all investment linked savings misselling, by ending investment linked savings selling altogether, and they have overseen a huge rise in non-advised financial product sales, by effectively ignoring their regulation while regulating advice ever more actively. In short, across all areas of prudent financial practice the FSA has diminished the availability and viability of advice. It’s a pity they only got to do that to unsecured debt and mortgage selling just as the credit crunch closed the stable door for them. How much better off would be the UK had they prioritised bad debt sales practice for reform, ahead of bad savings and investment sales practice?
The Tories have a chance to reset the agenda, so that it again encourages advice and sales of savings and investment and protection products while controlling more closely sales of debt and properly regulating non-advised sales. If Labour preached prudence while practicing profligacy, the Tories must surely promote, through tax and tone and deregulation, the taking of personal responsibility for protecting and growing one’s wealth. You know it makes sense, Mark!
This article appeared in a recent edition of Money Marketing
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New research released by Scottish Widows last week showed that 81% of small-business people who have key people in their businesses are not covered for the loss in profit or cost of replacing those people.
LifeSearch believe two of the most important types of cover are Keyperson Cover and Shareholder Protection. The main aim of Keyperson Insurance is to ensure that the loss of someone important to the business is compensated to cover the financial impact on the business. However, not every director is a key man and won’t necessarily be of the same value so they should consider each case individually depending on each director’s value to the business.
Shareholder Protection is used to provide a payout when a shareholder covered by the policy dies. The money can then be used by the surviving shareholders to repurchase the shares, if required, which may have passed to a beneficiary who does not have the skill or experience to make a worthwhile contribution to the business.
Some more key facts from Scottish Widows:
77% of sole traders who have a key person in their business, do not think their business would survive the loss of that key person
73% of sole traders do not have a business exit strategy in place1,
Just 2% of sole traders are covered for the loss of a key person upon death, compared to 15% who have insurance in place for office equipment
Business Protection is a little known but vital type of insurance. LifeSearch offer advice in all areas. More information is available at www.lifesearchbusiness.com.
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LV= has extended its free critical illness cover offer to 31st January 2010. All new customers taking out an income protection policy under the LV= Flexible Protection Plan by 31 January 2010 will receive free lump sum cover equivalent to three times their monthly income protection benefit.
Free critical illness cover was initially launched as a short term offer in February 2009 and feedback has been so positive that LV= has decided to extend it until the end of this year.
At LifeSearch we certainly think it's an excellent initiative.
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Bupa Individual Protection has added more than 130 Own Occupation definitions to its individual Income Protection policies including dentists, surgeons and college lecturers. These professionals will now be able to protect their income based upon their specific occupation.
LifeSearch warmly welcomes this positive move by the insurer. Own Occupation definitions - which means claims are triggered when the policyholder is no longer able to do their job due to illness or disability - are the gold standard in Income Protection policies so the more occupations that are offered at this level of cover, the better.
We believe this could be a big year for Income Protection as several providers look to improve their offering. We hope 2010 will prove to be the year when new initiatives drive IP from its current slumber into a more mainstream position. That won't happen by chance though, it needs the industry to grasp the nettle firmly.
Please let us know what you think by commenting below.
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There's an interesting article today on lovemoney.com that ranks the claims ratio - the figure that tells us how much of the money we pay in premiums is paid out in claims - of various types of insurance products.
Life Insurance came out on top of the pile with 160% claims ratio.
Premiums have been falling for years and are continuing to fall so it is a product that is currently very good value for money.
Other products such as Income Protection and Critical Illness Cover are highly important to consider too and also have good payout rates.
To read the article visit
www.lovemoney.com/news/insurance/insurance-policies-that-pay-out--and-ones-that-dont-4378.aspx.
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