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Life firms are milking the system

The editor’s comment of the week

Relating to Money Marketing’s online article, FOS raises concerns over whole-of-life policies, Eleanor Downie (FCII) and myself raised this question 12 months ago.

We carried out some basic research across several companies and found a wide diversity of approach by insurers.

Regulatory and statutory constraints work against guaranteed products (fixed sum assured/fixed premium with accumulating surrender values) and yet provide little guidance for underwriters.

The difference in treatment of published and what now appear to be increasingly popular “annual” reviews.

There is no doubt in our minds that certain life companies are milking the system and effectively “dumping’ older lives in order to improve their balance sheets from increased premium income and reduced risk.

The regulator knows and ignores the symptoms and the disease. It has to be stated that some companies not only honour their contract terms but communicate effectively and in the life assured’s best interests.

The whole of life insurance market requires a sensible detailed appraisal before yet more damage is done to a very important sector of the life assurance industry.

Terence O’Halloran

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There is one comment at the moment, we would love to hear your opinion too.

  1. Any adviser who arranged a WOL policy must have been aware of the fact that the premiums were reviewable, particularly those based upon LAUTRO assumed expenses. Of course this does not apply to ALL WOL policies but that message will not get through to those consumers who may have already decided to cancel their very valuable life cover. Is this the way regulation is supposed to work?

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