Life offices bypass advisers on FIB claims
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Insurers are contacting beneficiaries eligible for family income benefit and offering to commute their plans to lump-sum payments without consulting the adviser who originally sold the policy, warns Lifesearch.
Lifesearch says some insurers are contacting beneficiaries at the point of claim for family income benefit and offering them the opportunity to commute it to a lump sum rather than receive a regular income.
But senior policy adviser Matt Morris says although there is no issue with lump sums as an option, insurers should not be bypassing the initial adviser in order to offer this.
He says: “Commuting the regular payment to a lump sum saves the insurers money on administration so it is in their interest to offer it. But the downside is that consumers are more likely to accept a lump sum even though it is probably not in their best interest.
“The heart of the issue is insurers should not be allowing consumers to make these decisions without taking advice. I think there is consumer detriment there and conflict of interest.”
CBK Colchester director Peter Chadborn says: “I think it is outrageous behaviour for any provider to do that and we would eventually stop placing business with any company that operated on that basis.”
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