Bulletin 33, 2006
Round up
2 – the number of life insurance rate changes since the last bulletin, Legal & General & Bright Grey
18 – the minimum smoking age in 2007 according to Scottish health minister Andy Kerr
18 – the percentage of LifeSearch clients who choose a life insurance term longer than 25 years
90 – on average the number of families we help to arrange life insurance and protection every day
£144,720 – the average sum assured for life insurance, both level term life insurance and decreasing term life insurance, and critical illness policies arranged by LifeSearch over the last three months, excluding Income Protection and Family Income Benefit
£440m – the amount of critical illness cover claims paid by Scottish Provident since 1996
Deal or No Deal!
A number of reporters from the world of life insurance and protection/finance won cash at our charity night last week, where LifeSearch matched the amounts won for charity. Thanks to a number of donations from our sponsors a total of more than £4,200 was raised on the night for Médecins Sans Frontières.
This year’s charity was the choice of our special guest karaoke star – Richard Walsh of the ABI, who performed a stunning version of My Way – Sid Vicious style!
PTA and switch options
At the beginning of the year LifeSearch began questioning the potential importance of including a ‘switch out’ option under Pension Term Assurance plans. By the summer the life insurance industry had reached the stage where half the market included the option while the other half didn’t. Given the potential impact on the consumer, as the market continued to grow our calls for the option to be included also grew, both publicly and privately. Now we are at the stage where just about every provider includes the option, which is a real win for consumers buying PTA should their circumstances change in the future.
The option is important because although PTA allows tax-relief on the life insurance premiums of up to 40%, the product can become unsuitable for consumers, such as those who intend to move abroad, those who change career or those whose pension fund might reach the lifetime limit – not forgetting of course the point that the Government could remove the tax-relief on this form of life insurance at any time.
The next step is for the life insurance providers to be absolutely clear to intermediaries and consumers about exactly when, and under what circumstances, the option can be exercised, and what premium will then apply. There is a school of thought that says switching to the non-Level Term Assurance equivalent is the best solution, however, if the life insurance policy has been in force for a few years a switch to the current gross premium might be less expensive.
Comments of the week
‘Just because it says it is a non-advised sale doesn’t mean it isn’t advice.’
Peter Hinchliffe
Lead Ombudsman for Insurance
As Money Marketing recently reported, the Ombudsman’s view is that as little as a nod in the wrong place or a yes over the phone at the wrong moment could constitute financial advice, regardless of what the paperwork says.
Independent research shows there is significant confusion among customers over what does and does not constitute advice in the life insurance and protection market. As long as every non-adviser is allowed to mis-inform customers by not telling them that they alone take responsibility for the suitability of the life insurance product they purchase, then the issue will not improve for consumers.
Heroes of the week
Scottish Provident
Who last week published their latest critical illness claims statistics.
The provider, who has recently recruited Alison Turner-Holmes to head up it’s life insurance and protection marketing operation, also confirmed that over the last 6 months the company had paid 788 claims totalling £48m and declined 156 claims. 8.4% were declined due to not meeting the policy definition and 11.4% due to non-disclosure.
Richard Walsh
For commitment above and beyond the call of duty!
And Nick Kirwan, who comes a close second for sharing the mike with Tom on 'Addicted to Love'. Real courage Nick.
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