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A single-minded approach

Like the rest of the world, I watched in horror as news of the London bombings unfolded on July 7.

I then read some of the human interest stories which filled the newspapers in the following days. One in particular caught my eye. It concerned the parents of a young lady killed at Tavistock Road.

They had just been told that the level of compensation they would potentially receive from the London Bombing Charitable Fund would be in the region of 11,000 as she had no financial dependants. In addition, her parents had realised that they were going to have to sell her flat to pay off her mortgage as she had no life insurance in place (and, I guess, no death-in-service benefits, either). They were extremely reluctant to sell at this stage, as the property represented the last tangible link with their daughter.

This sparked quite a heated debate between myself and my other half, who is also a financial adviser. Do we now have more of a duty of care towards our single clients when recommending life insurance? Historically, our industry has argued that life cover is not required for single people with no dependants. But, if offered the option, would the girl mentioned above have effected some life insurance to protect her family from further grief? We will never know.

I do have single clients who prefer to pay small premiums for mortgage life insurance because they want their property to be left unencumbered for their siblings’ benefit should they die. Is this sensible planning or am I scare-mongering? Would that money be better off in their pension, where they have the potential to enjoy it instead?

I conducted a poll among my single clients, who are all admittedly fairly young professionals for whom life cover would be inexpensive. Without prompting, they all said they were not concerned about the financial implications on their families if they were to die. All without excep- tion have changed their opinions post-July 7. All without exception had contacts who were caught up in the chaos, so the implications of what happened remain very real.

Would I have had the same response to my poll if I still lived in Newcastle? Possibly not.

Whether the perceived need for life insurance increases as a result of terrorism, what will definitely will be a positive factor for advisers are the A-Day changes. As most of you know, current legislation surrounding pension term insurance is fairly restrictive, leading to a low take-up of cover in this manner. Come A- Day, as long as the total pension fund and sum assured are below the lifetime limit of 1.6m, then tax relief should be available.

If you ask clients whether they would like to ensure that their mortgage is cleared in the event of their death, while getting Chancellor Gordon Brown to fund up to 40 per cent of the premiums, then the merits of pension life insurance will be seen to be greatly enhanced.

Clearly, this could be a boon for qualified advisers. I believe the need to seek advice over what is fast becoming pension complication will steer people away from the internet and “three cans of beans and some life insurance, please” operators.

Incidentally, while we are on the subject of qualifications, can I add my tuppenny-worth on the loss of the MSFA designation for AFPC? While I understand some of the positives of the Sofa/LIA merger and while I am not the greatest lover of designatory letters, the Member of the Society of Financial Advisers did have a certain ring to it.

This has now been rep- laced by the dreadful Dip PFS. The word diploma reminds me of a American high school exam or the certificate received at the end of a 13-week night- school course in underwater basket weaving. It downgrades what we do.

Accountants and lawyers do not dilute their qualifications and, funnily enough, they are considered to be professionals. So has the financial services industry advanced its cause? I think not. Snob? Moi? Probably.


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