There has been a recurring theme in the consumer press in recent weeks – cheap premiums, especially for life insurance, are coming to an end.
As life insurance is the overwhelming protection focus of the public, I will concentrate on that area. The price of a life insurance policy is at a historic low and yet the public rarely seem aware just how inexpensive it is. For a young person in good health, an average-sized policy can be as little as £5 a month.
But the impression has persisted that life insurance is much more expensive than it really is. Consumer misunderstandings are common in protection, such as the public perception on paid claims. Most people do not realise that insurers’ pay rates are over 90 per cent, especially for life insurance. They assume it is much lower.
Yet key messages repeatedly fail to reach many consumers. Price is only one element that consumers need to consider when buying protection and, in many consumer publications, particularly the broadsheets, that message is slowly seeping through.
Too often, consumers have not received the right information (something that is mainly due to the industry’s communication failure) but maybe now the tide is turning.
I have been interested to note the sudden rush of journalist enquiries and resulting articles advising readers of the imminent jump in the price of premiums. If this translates into a rush of protection enquiries, it will present a couple of problems – is the industry geared up to handle and process these applications in time and will these clients be given proper advice on, say, income protection and trusts, or simply pushed through the life cover pipeline?
There are plenty of highquality protection advisers but there are also unscrupulous distributors out there which can damage the public image of the protection industry for years to come.
This is partly the reason why Lifesearch has proposed a distributor’s code of conduct – a set of minimum standards that providers should ensure anyone selling their products adhere to. The image of the industry is at stake and, at a time of rising premiums and falling welfare provisions, that is something that must not be allowed to happen.
The consumer press is advising readers to buy now to avoid price hikes that will inevitably follow from I minus E and the end of gender pricing. This consumer press interest in protection, especially when there is also a focus on product quality and the need for advice, is positive for the industry.
What is important is to ensure that the next messages they receive are not tales of how dodgy distributors have betrayed their trust.
Matt Morris is a senior policy adviser at Lifesearch