News Review: Protection When good intentions backfire by


Kevin Carr chief


executive of the Protection Review and MD of Kevin Carr Consulting


So the powers that be who rule us from afar are back once again with the equality act, perhaps a generally sen- sible piece of legislation, but one which carries far-reach- ing and quite possibly rather anti-consumer outcomes. Where to start? report-


edly employers will no lon- ger be able to ask questions about a potential employee’s health, which means they won’t know how many days off sick you may have had, whether or not you suffer from a bad back or if you’ve spent six months in counsel-


ling or even rehab for that matter. Whilst this arguably


makes the workplace a fairer place to be, the im- pact on group insurance, where employees of a com- pany are covered under the same scheme, could be quite negative. the company’s workforce, by default, will over time include people who are more likely to claim on benefits such as income Protection, which can only force prices up. But in the present economic climate employers are struggling to afford the current ben- efits, let alone pay more, so the likely outcome is that benefits will be reduced across the board, including the existing healthy work- force.


In trusts we must trust Fortis Life recently revealed a significant


increase in the number of protection policies being written in trust through its online process. While they weren’t specific about the numbers, they said the amount had ‘more than doubled’ over the last four months in comparison with the previous four months.


When it comes to the use of trusts, it’s a


pretty open and shut case: There is a strong argument that almost every life insurance policy should be written in trust (if not ‘life of another’ of course). Without getting too technical, a trust is just an A4 piece of paper that requires a few signatures. Ok, it’s a little bit more complicated than that, or at least it used to be, but even mortgage business should be considered,


moving closer to home


with the individual mar- ket, sexual discrimination has been the buzz word in recent weeks. the likes of Sheila’s Wheels could soon be a thing of the past when insurers are forced to charge the same insurance rates for both men and women. While again this is arguably the fair and right thing to do, the implications in the world of insurance are unlikely to benefit anybody. taking life cover as an example, female rates are generally cheaper (the girls on average live longer than the boys) so the cost of life cover for females would increase to match that of men. the big question is whether or not the price would fall for males? if it


especially if there is likely to be any monies left over after paying off the mortgage (even if the policy has been assigned).


Using trusts speeds up the payment of a claim, makes sure the monies are paid to the right person, and sometimes, most importantly of all, can avoid unnecessary inheritance tax. After all, there’s not much point in saving 50p a month on your life cover if 40% of the payout goes to the Treasury. The online trust process has been developed to make life easier for advisers and responds to feedback that writing covers in trust was beneficial to customers, but often made too confusing and difficult. Other providers offer online trust services and policies tend to stay on the books longer when written in trust.


did, it would likely only be by a small amount, if all at. this is mainly because of the cost to the industry of re-pricing millions of vari- ables as a result of the new legislation. good intentions perhaps,


but very possibly with unin- tended consequences.


News in brief


• LV= is offering a 5% income protection discount for the rest of 2010 • According to Scottish Provident Almost four million Britons have less than six months worth of emergency financial provisions


• Bupa Health Assurance is to be bought by Resolution subsidiary Friends Provident Holdings • The FSA is set to challenge the British Bankers’ Association’s judicial review of its new PPI complaints handling measures.


• Royal Liver has closed its IFA protection arm to new business with immediate effect


• Canada Life has launched a new group critical illness policy


• Friends Provident has enhanced its critical illness cover with the addition of mastectomy cover and five ABI+ conditions.


mortgage introducer NOVEMBER 2010 11


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