RDR and financial protection: the quick way to kill the market
Issue of the month
Since the RDR paper came out earlier this month there has been plenty of discussion about what would happen if it was extended beyond its current regulatory remit of investments and savings and into protection. To be blunt, it would be devastating news for consumers. The RDR is, broadly speaking, a positive step in the investment market but it will effectively cause the death of protection advice if it is applied to protection. This is because most people are not prepared to pay a fee for protection advice and, as a result, the amount of advisers willing and able to sell protection will shrink. More IFAs moving into protection from the investment arena would be a big positive for consumers as it has historically been an area of financial planning that has been neglected. Protection is a specialised area that needs advice. More advisers selling protection does not mean there will be more misselling. If anything it should mean there will be less. After all, the big scandal of recent times, the PPI debacle, was caused by non-advisers. Misselling always needs to be taken seriously but to do it by extending the RDR into protection would be like cutting off someone’s head to cure a headache.
Round up
1 – the number of years Real Life Cover has been with us, having been launched by Fortis in July 2008.
3 – number of rate changes since the last bulletin (Fortis, Friends Provident, LV=)
65 - % of people surveyed by Scottish Provident who would be affected if they or someone in their household contracted a serious illness and had to give up work for more than six months
3868 – the number of lives covered by LifeSearch in June 2009 (up from 3462 in June 2008)
Case study of the month
Client: Mr Chappell
Needs: the client and his wife have a joint life policy through Zurich and are paying £77 per month. They are also interested in Unemployment Cover.
Our recommendation: the adviser suggested two single life policies and Unemployment Cover for a total premium of £100 per month. Income Protection and critical illness was also discussed with the client, as well as writing the life cover policies into trust.
Result: They are saving £30 a month on the life insurance element yet have doubled their cover (2 policies instead of 1) and have also got Unemployment Cover too. They are very happy.
(If you need a case study, feel free to get in touch and we’ll find one for you).
LifeSearch Comment
Marketing is crucial to the survival of the financial protection industry, as LifeSearch MD Tom Baigrie explains here.
Hero of the month
- Aviva…
…for their offer of £10,000 of free life cover for all new parents. It’s an offer that they have backed by a major advertising campaign and will mean that protection in general enjoys a much-needed boost in its public profile.
Back to Insurance Bulletins | Press Centre
|