Protection Watch July 2012


Would you bet on your own life expectancy?

Protection Watch with Kevin Carr

1. Would you bet on your own life expectancy?
Drewberry insurance has launched a new life expectancy calculator which predicts the chances of popping your clogs before your mortgage is paid off. The clever feature estimates that 1 in 10 male and 1 in 15 female first-time buyers would die during their mortgage term. The calculator is available on the firm’s website and should help advisers to have an interesting conversation about a client’s protection needs.
VERDICT: Promising lead

2. Does your IP plan change the terms if you lose your job?
I recently learned of an adviser’s client who lost his job and soon fell ill before finding a new one. Unfortunately the illness was quite serious and he claimed on his Income Protection policy only to find out that the ‘own occupation’ definition he had been paying for was automatically switched to ‘work tasks’ the day he lost his job. I can understand the need to change the definition for someone who doesn’t work, such as a house person, but surely in such circumstances a period of grace would more fair?
VERDICT: Back to the lab

3. MoneySupermarket joins the STIP revolution has launched a new short term income protection (STIP) channel for consumers looking to buy short term cover. Looking at the site, it clearly explains the options and key differences between both short-term and long-term IP, as well as ASU and MPPI, which is to be welcomed. Perhaps surprisingly, the website also encourages shoppers to check what cover they already have in place, such as any cover provided by the employer, and also briefly addresses the difference between ‘own occupation’ cover and work tasks. Since 6 April, it is no longer possible to sell PPI or MPPI at the same time as a loan, so it makes sense to cover wider expenditure, not just monthly loan costs, and this is one reason why more firms are adopting the STIP approach over MPPI.
VERDICT: Promising lead

4. FOS complaints top 250,000
Over a quarter of a million formal complaints to the Financial Ombudsman Service (FOS) were made in 2011/12, the service reported in its latest Annual Review. In total FOS also handled over 1.2m frontline enquiries and complaints—more than 5,000 every working day. The vast majority (60%) of complaints were about payment protection insurance, which has now become the most complained about financial product ever, making up 25% of all complaints received by the FOS since it was set up (mortgage endowments are second, on 21%). Complaints about Income Protection and Critical Illness Cover also increased, perhaps linked to events in the PPI market where third party firms are trying their luck with other product types. Complaints are likely to go up in tough economic times, but the rises in IP and CI complaints are both disappointing and surprising when overall the industry is perceived to be making many improvements.
VERDICT: Back to the lab

5. Aviva gets healthy
Aviva has launched a healthy living Facebook app as well as a stress management mobile app, which rates users’ health and allows them to compare scores with friends and family, before providing them with advice and goals on how to become fitter and healthier.
VERDICT: Promising lead

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.
article first appeared on IFAonline