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Bacon or cheap insurance?

Vegetarian life insurance has been a hot topic since Animal Friends Insurance, the pet insurance specialists, said they would give vegetarians and fish-eaters an average 6 per cent discount on their life premiums.

But Steve Casey at Bupa has queried how the company will determine who is a genuine veggie and who is simply claiming to refrain from bacon butties to shave 6 per cent off their life cover.

He says: “It will be interesting to see how the company ascertains the applicants are genuine vegetarians and how it will police them.”

But Animal Friends spokesperson Pete Marcus says applicants will be taken on trust.

Marcus says if the insurer discovers the policyholder has been chomping on chorizo, munching on meatloaf or pigging out on pork then the policy is deemed invalid. He doubts many people will take the risk.

Will other insurers follow Animal Friends’ lead? Aegon Scottish Equitable, for one, has no current plans to.

Aegon PR manager Mark Locke says: “Some vegetarians do not have a healthy diet so we would not be rating people on diet alone.”

Hmm cheaper life cover or bacon butties? Tough call.

In other news Bright Grey has highlighted the fact that if a pensions term assurance policy lapses it cannot be reinstated with tax relief.

Since the industry standard is to lapse policies after only one missed premium Bright Grey technical product manager Ian Smart says many people could unintentionally lose their tax relief.

Smart says this could lead to loads more people, who currently have cover, being uninsured as they scramble to find a cheaper deal then give up.

He says: “If a person’s policy lapses they will probably cancel it and try to find a cheaper life policy or go ‘sod it’. This move will lead to more people being unprotected and the industry will get the blame not the Revenue.

“The Government is taking a very harsh line. It doesn’t want these policies hanging around for the next 25 years.”

But advisers believe insurers can stop this happening if they want to by not being so quick to lapse policies.

Meanwhile Progress by Royal Liver has developed a snazzy little critical illness factsheet for advisers on the back of concerns that advisers are choosing policies based on their Defaqto rating rather than product features.

While Defaqto denies advisers work this way and says providers would add conditions simply to boost their Defaqto rating, Royal Liver decided a factsheet explaining where the value lies in a critical illness policy wouldn’t hurt.

The factsheet outlines that the vast majority of claims come from cancer, heart attack, stroke, total permanent disability and multiple sclerosis.

Protection technical manager Mark Davies says: “The factsheet does show that there is little extra benefit from adding critical illness conditions as the top eight, if you include TPD as a critical illness, account for 99 per cent of claims.”

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