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Product matters

The explosion of internet-based sales and servicing is resulting in

surfing becoming a regular daily activity. Trading online for shares, unit

trusts and now Isas is commonplace.

It is not until recently that protection, the type of business that can

take weeks to process, has made its way on to the web.

Two companies offering this approach in different ways are Friends

Provident and Legal & General.

Friends Provident&#39s needs to be set up on your company website, allowing

your clients to apply online themselves. Legal & Gen-eral&#39s is available

through its website and is designed to be IFA-oriented, with advisers

sitting with the client and talking them through the process.

Of the two, the more accessible is L&G&#39s, which can offer up to

£350,000 of cover with no need for an MAR forlife and critical

illness. The application form is simple to complete and easily understood

by the client who only needs to verbally agree to the IFA that the

information is correct for the application to be valid.

However, caution should be taken not to speed through the application just

to show off and get the client cover. The threat of non-disclosure is never

more prevalent, as it is easier for the clients to forget medical

conditions, with an IFA asking the questions, as opposed to them sitting

down and handwriting the application themselves.

Indeed, our experience shows that the more times you ask a client to

recall visits to a doctor, the more visits they recall. If you do go down

this route, make sure you are not recommending high tech in exchange for

high-spec.

Steve Petrie is a consultant with John Joseph Financial

DOCB:

SRCE: Money Marketing

PDAT: 060601

SCTN: News

PGNO: 96

RANK:

HDLN: Half of Lloyds TSB&#39s endowments in red

SBHD:

BYLN: Chris Duncan

TEXT:

Lloyds TSB Life has stunned customers and IFAs by admitting that half its

mortgage endowment policies are highly unlikely to pay off homeloans when

they mature.

In the worst case yet of homeowners being forced to foot the bill for

underperforming endowments, the bank also acknowledged that most of the

remaining policies only have a slight chance of hitting their target.

The admission comes as endowment providers are in the process of sending

their customers reprojection letters telling them how their policies are

performing.

Lloyds has sent half its 270,000 policyholders red letters warning them

that their endowments are in serious danger of failing to pay off their

mortgage and 46 per cent have been sent amber letters which mean policies

will have to increase by 6-8 per cent to avoid a shortfall.

Just 4 per cent of policyholders have been sent green letters, putting

them in the clear. ABI figures show the industry average for red letters is

around 14 per cent, with amber 36 per cent and green 50 per cent.

Scottish Amicable says almost half its policyholders have had green

letters while Standard Life, Norwich Union and AMP have pledged to make up

any shortfalls as long as certain growth conditions are met.

Independent Financial Services director Jim Gillespie says: “These figures

are just shocking. Lloyds has to bear responsibility for this and it just

emphasises again the need for independent advice.”

Riach Independent Financial Advisers proprietor Bob Riach says: “It is

quite frightening and will do even more damage to the endowment industry.

It would be very interesting to see what growth rate assumptions were used

when these policies were sold.”

A Lloyds spokeswoman says: “The policies are not really mature enough to

have benefited from the healthy economic climate. We will look into any

allegations of misselling on an individual basis.”

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