Bulletin 09, 2006
Round up
Life insurance product and life assurance rate changes announced by Bright Grey.
Life insurance rate 're-shapes' announced by both Scottish Equitable and Legal & General.
LifeSearch Awards
Please find attached the brochure including the photos and judges comments from last months Life Insurance and Protection awards.
Cover poll
71.1% of advisers think the launch of Virgin Money’s cancer-only cover will spur the development of similar products, while 28.9% don’t.
This month’s survey asks whether there will be a high uptake of Pension Term Assurance after A-Day.
Comment of the week
'Buying life insurance without using a trust is like buying a car without a steering wheel.'
John Luff,
Senior Technical Consultant, Standard Life
Hero of the week
Scottish Equitable & BUPA
Both life insurance offices confirmed this week that they will not allow their Pension Term Assurance products to be sold without advice. Whilst this is of course an initial decision, which can change in the future, we have long believed that the manufacturers of complex products should take responsibility for those who sell their products and there is no doubt that Pension Term Assurance is potentially very complex indeed.
Despite the perceived attraction of tax-relief Pension Term Assurance could still be unsuitable for a range of consumers, including anyone who is unsure about their future employment or tax status. There is also unlikely to be an income option, such as Family Income Benefit, which is often the most suitable form of life cover for young families.
Before buying Pension Term Assurance we believe consumers should first consider a number of important points including the pension issues regarding the lifetime limit, the potential loss of enhanced protection, the potential loss of tax-relief, the potential for Terminal Illness Benefit to become taxable, the likelihood that new premium rates will apply should Pension Term Assurance become unsuitable and what trust arrangement will apply.
There is a danger that non-advised pension term assurance sales will be driven by profit before suitability and in order to treat customers fairly we believe that sellers of Pension Term Assurance post A-day should explain these issues to their customers before they consider switching. This raises the question of non-advised sales and we question how a non-adviser would be able to ensure that their customers understand these risks before buying and ask what responsibility, if any, will be placed on non-advisers should they encourage consumers to switch based upon the initial price alone.
Should any non-adviser fail to sufficiently inform their customers of these issues they may be failing to disclose a material fact.
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