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Le Beau: CI cover must become a political issue

People who are obsessed with an idea find it impossible to believe they might be wrong. And as someone who has devoted his life to trying to promote the protection industry, I cannot believe I have wasted my time.

It seems axiomatic to me that people who have financial liabilities and obligations would want to ensure that should the worst happen – premature death, disability, serious illness or the inability to look after themselves in old age – they do not saddle their dependants with a huge debt or see the complete collapse of their lifestyle. Surely it follows that protection insurance is one of the most important purchases someone can make.

Stated in that way the purchase of protection seems the ultimate no-brainer. But the reality is that a significant part of the population does not see it like that. Protection is a grudge purchase and in times of very significant financial pressure other priorities arise. I am not sure if priority is the word I would use but, as I have already stated, I am biased.

In Western democracies, we give people a significant degree of personal freedom as to how they spend their money and governments hate to be too proscriptive. However, it cannot be a good thing for the Government to have so much potential financial disruption as a possibility, with massive implications for social and economic stability. Governments want to encourage social mobility, not social drift.

I am no economist but if the Government wants to encourage people to save, it should be seriously committed to ensuring that appropriate levels and types of
How many insurers regularly seek dialogue with politicians and, if they do, what do they talk about? There is an important place for collective action through trade associations but this is not enough. At a time when welfare reform is a demographic necessity, long-term care is back on the agenda and our protection products are close to the cheapest in the world, I believe we should be engaging at many levels with politicians inside and outside the Government.

I would be interested to know how many protection insurers were represented at the party conferences this season and to know who is studying the Dilnot Commission’s report for opportunities.

As we talk about the basics of Nest, is anyone arguing that some sort of protection compulsion could be made by the industry.

We turned down the chance to shout about protection a couple of years ago. I just hope we are having quieter, more focused discussions with people that matter.

Peter Le Beau is managing director of Le Beau Visage


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Peter,

    CI cover is an expensive purchase for most people on average earnings, and also has aquired a reputation for not paying out.

    Until these issues are dealt with I cannot see it ever being purchased by large numbers of people.

  2. Alan

    CI Cover (or SIC as we at Pruprotect promote) is only as expensive as the client wants it to be. Advisers seem to try and cover the full amount of mortgage, or none at all. Why not match the cover to what the client needs and can afford – some cover is far better than none.

  3. Peter – I too believe protection is important, but while I could see an argument for “auto enrolment” in employer group protection benefits, as with compulsory annuitisation, it would be unethical to force compulsory life insurance as it is contrary to several religions beliefs and w do live in a multicultural society.
    The thing with auto enrolment of protection benefits is however that the distribution payments to the “seller” are a fraction of that paid in commission if each plan is sold individually to a consumer, so you could be putting youself out of business if you get your way Peter!

  4. One problem with CI is that it developed and was successful as a mortgage repayment vehicle add on to Life Assurance. Therefore the perception remains that you need “the full sum assured”.

    Thus the customer faces a choice of £15 for Life cover or £80 for both. So they choose the cheapest.

    Perhaps we need to redefine CI so that it is an emergency fund covering one year of salary, or something. So all we are doing is adding maybe £25k of CI to the life cover and therefore not scaring the customer away with the price.

  5. or a better idea would be to talk to the client about the essentials do a budget plan and look at what they realisticly can afford. 25K for the sake of it adds nothing. That’s not advice at all.

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