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Protection industry has reasons to rejoice and worry

There were a number of reasons to celebrate this week but also a major issue emerged that led many in the protection industry to feel a bit down in the dumps.

But let’s start on a positive note.

Firstly I celebrated my Birthday this week – champagne can be delivered to the Money Marketing offices. But seriously, Scottish Widows had a reason to be jubilant with the release of its claims stats.

In the year to October 2006 Scot Wids paid out over £25m on 774 critical illness claims and only 16 per cent of claims were turned down compared to 18 per cent in the previous 12 month period.

Non-disclosure was responsible for 53 per cent of rejected claims and 43 per cent of claims were declined because the claim did not meet the policy definition.

Cancer accounted for more than 60 per cent of claims, followed by heart disease, stroke and multiple sclerosis.

Interim protection market director Richard Jones says: “The need for financial protection has never been greater yet the lack of consumer confidence is contributing to people failing to invest in the valuable protection that they and their dependants need.”

Very true Richard and publishing claims statistics is a step in the right direction to rebuilding that consumer confidence.

LV= deserves a pat on the back for boosting the maximum benefit available on its income protection plan by over 80 per cent to £150,000. It has also removed the only remaining standard exclusion across its income protection product range making it the only provider in the IFA market to have no standard exclusions on life assurance, critical illness and income protection.

So this week LV= very good.

We all said bye, bye, on June 6, to the silly Age 70 rule, which restricted the sale of protection policies maturing beyond age 70 or with terms over 10 years to Cob advisers, and Aegon Scottish Equitable was quick to update its product range accordingly.

Aegon now offers group life cover, excepted group life cover, single life high earner’s cover and equity partner group life cover to age 75 and I am sure other providers will swiftly follow suit.

But now for the bad news. Protection gurus and IFAs alike are saddened by Lincoln Financial Group’s latest research which found that 82 per cent of advisers cite competitive premiums as the deciding factor when recommending a protection provider to a client – ahead of pay-out levels, flexibility of underwriting and service levels.

After the Ombudsman announced a decline in complaints for income protection and critical illness everyone thought an improvement in clarity, rules and information in the industry was beginning to filter through but it seems, while many advisers are working hard to improve the protection industry’s reputation and treat customers fairly, others are doing essentially what a consumer can do themselves on a direct sales website.

Oh, and by the way, birthday cakes are very welcome.


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