View more on these topics

Going for rebroking

Term insurance is one of the more simple financial products on the market but this does not mean that IFAs are necessarily at a disadvantage.

Direct Life and Pensions managing director Michael Ward points out that two-thirds of term insurance policies are sold by tied agents but that the IFA sector consistently beats tied agents on premium rates.

IFAs say it is usually easy to rebroke a term insurance policy so that the client pays less without any loss of value. Even if the customer is, say, five years older, a change in circumstances – such a giving up smoking – usually means that cheaper term insurance should be available.

Usually there is nothing to be lost by rebroking a term insurance contract unless personal problems in the intervening period could result in a medical appraisal and, therefore, higher premiums.

Legal & General protection director Ronnie Martin points out the necessary safeguard of getting the new cover in place before relinquishing the old policy in case of problems.

He says term insurance rates have seen downward pressure. Other than increased competition, he cites the continuing improvement in mortality assumptions and the cost savings resulting from technological advances, such as IFAs being able to obtain term insurance cover for their clients online without written signatures.

As a simple concept, term insurance is probably the most suitable financial product for direct or online purchase. However, only those with totally standard criteria are likely to find that they will be accepted.

Martin says L&G finds that only 55 to 60 per cent of online applications can be completed online. But IFAs are concerned that even those without special circumstances will not necessarily be getting the best deal unless they get appropriate advice.

Many IFAs simply accept online competition as the present reality. A few are even willing to enter into an auction process, promising to meet any quote the client has already been provided with.

But as well as providing competition, the internet can make the work of the IFA easier, allowing them to easily and cost-effectively source the cheapest and most suitable product for the client.DF Proctor (Financial Services) director Brian Mitchell points out that IFAs will also have knowledge of the market and will be able to point clients in the direction of providers which specialise in different ends of the market.

He specifies Norwich Union as being competitive for older customers and Standard Life for younger clients. But Mitchell is concerned that even though term insurance is not complicated, some people might be purchasing cover online that fails to include the benefits they could have obtained by going to a different provider. “After misselling, we might now end up with misbuying,” he warns.

He singles out renewal options as an area in which customers might not be aware of the differences between different products.

How lucrative is rebroking term insurance for IFAs? Mitchell says: “It does not pay for holidays to Barbados but it does buy the pens and pencils.”

Ward says: “Rebroking will be most successful if your record keeping is good and less so if your records are in a mess.” He adds that if customers are approached properly, most will be willing to have their cover reviewed.

“If you can show that for an extra couple of pounds a month they can get cover of £150,000 rather than £100,000, only a minority will decide to go for the same cover.”

Recommended

IF offers loan calculator

Intelligent Finance is mailing a mortgage calculator to 21,000 IFAs. It says the calculator can help IFAs show clients the benefits of switching their mortgage to the company. To alert IFAs to the mailing, it is sending a promotional postcard with the line, Do you have the Midas touch? IFAs will then get a computer […]

Britannic puts its finger on finance

The world of finance is the target for the global financial services fund from Britannic asset management. The fund is a unit trust that is pitched at experienced investors who are investing for growth in the financial sector of the market. Global financial services will invest in a global portfolio of companies that are involved […]

Sun Life of Canada launches new product

Charles Schwab is moving into the UK pension market with the launch of a self-invested personal pension. The Sipp has a minimum initial investment of £5,000 and subsequent investments of £100. The set-up fee is £135 and the quarterly administration fee is 0.125 per cent of fund value for the first £100,000 and no charge […]

LeggMason VCT marches on

LeggMason Investors has joined the army of companies offering venture capital trusts that invest in companies listed on AIM (alternative investment market). The LeggMason AIM VCT enables clients who are looking for capital growth over the longer term to invest in smaller companies that have the potential to expand. This VCT invests in unquoted companies […]

A modern horror story

Every day a quick scan of the news reveals some new horror that will change the lives of those involved forever – the unlucky accident on the way to work, a tragic illness that cuts a young life short or the holiday accident that leaves more than just a scar to cope with. We barely […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com