Bulletin 30, 2006
Round up
2 – the number of life insurance rate changes since the last bulletin, Scottish Equitable and Friends Provident
25 – the percentage of people on low incomes who are likely to respond to direct mail offers - double that of some higher income groups (but we don't know if the same figures apply to life insurance mailings!)
33 – including the Best Income Protection Intermediary Award at this week’s Health Insurance Awards, the total number of awards and highly commendeds presented to LifeSearch since launch in 1997
74 - the percentage of young people (18-29) who would take out life insurance before considering protecting their income – with an income protection plan
84 – the percentage of life insurance products currently sold by HSBC that are written as pension term assurance
1.2m – the number of people in the UK who have stopped smoking since 1998 (source nat stats)
PPI
In light of the FSA and OFT statements on PPI this week, we think some of the comments in the life insurance trade press from PPI sellers are missing a key point, perhaps deliberately, which just adds to the problem.
Many companies promote variations of payment protection insurance, be it PPI, MPPI, ASU, IPI or any other play on words they care to dream up to confuse consumers into making a potentially costly and emotional mistake. Such policies typically pay out for up to one year if you are unable to work because of accident, sickness or unemployment. The profits are often excessive and being BackCare week the timing is rather apt.
But here are a few examples of what the PPI sellers don’t want you to know:
- 1 in 4 long term Income Protection claims are for back related issues
- 1 in 4 long term Income Protection claims continue for more than one year
- 1 in 10 long term Income Protection claims continue for more than ten years
PPI can have many other problems, such as reviewable terms and conditions, reviewable premiums, inferior definitions of being unable to work and automatic exclusions that sometimes include back pain and stress. To sell PPI without advice - and without mentioning Income Protection - while still treating the customer fairly at the same time is pretty much a contradiction in terms. In reality, by the time the seller had got through half of all the details that consumers really ought to know the customer would've lost interest, which is why sellers so often skim over the flaws.
Don’t get caught out with inferior PPI – or any of its many similar alternatives, listen to the Consumer’s Association and consider long term income protection instead.
Now, that’s what I call advice
A well known company who recently launched a cancer only product (think record stores, planes and trains) has asked journalists to help with the compilation of a CD entitled ‘Now that’s what I call LifeSearch’ which features various songs relating to life and death – Stairway To Heaven, Live and Let Die, Ashes To Ashes and so on. Still Ill by The Smiths was my personal favourite!
We thought about returning the favour and classics such as I Want to Wake Up with You, Do You Remember the First Time, All Night Long, Promiscuous and of course Like a Virgin all sprang to mind.
However, on a fractionally more serious note, raising the issue of how IFA commentators might treat an IFA version of a cancer only product is valid. But, a product bought direct is not the same as a similar product bought through an IFA, for one key reason - advice. If the product was unsuitable for their circumstances then advised clients can seek compensation from the Ombudsman, however, the same cannot be said of any direct sellers.
Comments of the week
Life expectancy is increasing for all groups in society. But there is still a clear north/south divide, with women in the north living on average one year less than those in the south. Northern men's life expectancy is two years shorter than men in the south.’
'It's difficult for us, trying to balance not becoming a 'nanny state' which tells everyone what to do, and trying to educate people that there are real changes that they can make to improve their health and fitness. But when it has an impact, as it does and will do over the long term, on the whole of the country and our ability to afford the healthcare system, it's our job to put the facts before people.'
Tony Blair,
Prime Minister
Hero of the week
Norwich Union
Who last week published a new set of paid and declined claims statistics for critical illness cover.
The new figures show that the life insurance company paid more than £80m in Critical Illness claims during 2005, with 68% of all claims being caused by cancer. For females the percentage was even higher at 77.5%. The number of claims declined also fell slightly compared to the same figures in 2004.
