Protection Watch - February 2012


Simple products? Nice idea, but cancer isn’t simple

5. Simple products? Nice idea, but cancer isn’t simple
Life insurance is a pretty simple product: You die, it pays out. The illnesses we suffer along the way, however, are not. Over half of all heart attacks in the UK are repeat attacks and diseases such as cancer are far from simple. Many range vastly in terms severity, aggressiveness and in the likely outcomes for the sufferer. As such, simple protection products may never be able to be quite that simple.
VERDICT: Back to the lab

4. Ageas latest to promote children’s CI cover
New research from Ageas Protect shows that a third of parents don’t know if their existing critical illness policy includes children’s cover. The provider is now calling for advisers and policyholders to check their existing policies. Most advisers will be aware that most modern CI policies include children’s critical illness cover, which provides advisers with the opportunity to inform customers about the value of their existing cover, especially parents.

3. Will your life cover pay-out go to the right person?
I recently heard about a single life policy, taken out to protect a mortgage, which had paid out when the policyholder passed away. The policy was called ‘Mortgage Protection’ and so his new family expected the money to pay off the mortgage in the house where they were living. However, as the policy was not written in trust (nor on a ‘life of another’ basis), in the absence of a will, and as he was not yet fully divorced from his ex-wife, the monies went to the ex-wife, leaving his new partner (and their children) struggling to live in the house. Many people presume that the main benefit of writing life policies in trust is to avoid potential inheritance tax, but it is also to make sure the monies are paid to the right person.
VERDICT: Back to the lab

2. Ghosts have a habit of returning
Aviva has launched an adviser awareness campaign to help IFAs engage with clients and their families when discussing their protection needs. Timed in conjunction with the re-launch of the firm’s life cover adverts featuring Paul Whitehouse (who plays a ghost) the project is aimed at helping advisers to focus on the positive aspects of family life by asking ‘What makes your family special?’ and by switching the emphasis away from protection products towards family life Aviva believes advisers will be able to change the way people think about protection.

1. Why December might arrive sooner than we think
In December we can expect to see the impact of a range of tax and legislation changes to hit protection prices. However, with so many changes coming at the same time, it wouldn’t surprise me if the industry thought about moving the goalposts a little. While this may be no bad thing for advisers, awareness of what is to come will be crucial. However advisers choose to introduce the subject of protection with their clients (TV advertising, family related questions, positive claims statistics, a falling reliance on state benefits or the threat of rising protection costs) there has probably never a better time to talk about protection.

Kevin Carr is Chief Executive of the Protection Review and Managing Director of Kevin Carr Consulting.

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... column first appeared in Professional Adviser magazine