Kevin Carr Consulting managing director Kevin Carr has raised concerns regarding the high level of joint-life protection policies sold to couples.
Munich Re estimates that about two-thirds of its protection policies are sold on a joint-life basis and Carr says the proportion of couples sold joint-life policies is likely to be even higher.
He says many advisers sell joint-life policies to couples as a default option but this may not be in clients’ best interests.
This is because a joint-life plan only pays out once whereas two single-life plans could both pay out.
Joint-life policies could also lead to non-disclosure issues where one-half of the couple wants to keep information private and there may be problems if the couple separate.
Carr says: “The cost of joint-life cover is typically fractionally cheaper than the cost of two single plans but I do not believe the difference represents good value for money. I think there is a strong case to limit the use of joint-life cover, and believe the industry should rethink its position.”
Lifesearch senior policy adviser Matt Morris agrees but says it would be difficult to cap the number of policies. He says: “I think it would have to be sold through education rather than regulation.”