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Just 3 per cent bought CI cover off the shelf but direct threat looms

Only 3 per cent of consumers are buying critical-illness policies off the shelf but providers are still concerned that direct sales are a growing threat.

Skandia says although the 3 per cent reflects intermediaries’ domination as the distribution channel for protection products, the direct market share could rise to a quarter as high-street banks and supermarkets exploit their scale and brand to entice consumers to sign up to non-advised sales.

Asked where they bought their critical-illness policies, 38 per cent of men and 30 per cent of women say they bought their plans at a meeting with their financial advisers and 48 per cent of women and 35 per cent of men bought their plans off the back of a mortgage application.

Skandia, which surveyed 400 CI policyholders, is concerned that 28 per cent of men and 22 per cent of women listed the source of their policy as “other”. Only 3 per cent bought a policy after picking up an application form in a bank or supermarket without prior consideration.

Protection marketing manager Alison Turner-Holmes says: “What is worrying is that if we add up the number of people who said they picked up an application on the spur of the moment plus those who specified ‘other’ and the ‘don’t knows’, this accounts for almost a quarter of the total. There is definitely an urgent need to communicate why consumers should take advice before buying this type of product.”

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