Jason King’s recent letter exemplifies the same arguments that were put forward in the 1970s, by the “buy a term and invest the rest” brigade who used bland figures to substantiate equally bland arguments. Term insurance was the foundation of all insurance but the foundation of life insurance and the concept of whole-life insurance acknowledged the fact that, contrary to Mr King’s argument, many people get to retirement and find they have no life insurance cover and would dearly like some. Dearly being the operative word.The biggest impediment to taking out life insurance is poor health. I am 60 years old and I have been working with clients for the last 35 years. The majority of my clients are between 50 and 80 and I have to tell Mr King that we have very few clients who have ever ditched a traditional whole-life non-profit contract or a traditional whole-life with-profits contract. We have, as he rightly states, had clients who have certainly in the last three years rejected the increases in premiums being imposed on them by life companies because of poor performance of underlying funds. Indeed, Jason King’s argument only goes to reinforce my long-held view that whole-life non-profit policies and whole-life with-profits policies in all their forms had one very salient point going for them – that the premiums were fixed at inception. Unitised whole-life, particularly maximum cover unitised whole-life, is merely term insurance with an investment element added,on a trend which was started by Migdal Binium an Israeli insurance company in the late 1960s and Hambro, Abbey and a whole raft of other life insurance companies modified and adapted in later years. My question to Mr King – if term insurance is such great value, why does only 2 per cent of it ever pay out? If the underlying growth rate for whole-life insurance is going to be so poor, perhaps Mr King can tell me how the underwriters are going to survive in the long term to pay such death benefits as they need to or are they reliant upon an ever-increasing mortality span of life that will decrease the number of claims that they have to pay?The security of a traditional whole-life policy has to be underwritten with assets set against those liabilities over the long term and the life companies have spent the last 20 years endeavouring to get themselves out of the guarantee business and shift the risk to the policyholder. Whole-life insurance may be more expensive than term but it pays out 100 per cent of the time in return for a paltry premium paid into a contract that at least gives the option to continue the policy and that can be converted to an inheritance tax provision arrangement.I rest my case. Terence O’HalloranLincoln
Credit Suisse Asset Management has issued new dealing terms on its multi-manager range.
Axa Life head of field sales Alison Burns left male IFAs quaking at the IFA Woman IFA of the Year awards last week. She started her speech with a description of her first weeks in financial services, which involved being made an honorary “bloke” by her all-male team and given the name “Peter” as a […]
Cheltenham & Gloucester
Two Year Premium Fixed Rate Mortgage
Lenders are increasing their efforts to tie or buy distribution, says Cartel managing director Carl Wright.
After a year of correctly anticipating bund yields (negative) and defaults (Abengoa), James Foster looks forward to a rise in interest rates in 2016.
- Top trends
News and expert analysis straight to your inboxSign up
Latest from Money Marketing
When Selectapension stopped executing defined benefit pension transfer advice last year, eyes quickly turned to its key partner firm: CFPML. A previously unknown entity, the FCA reviewed CFPML as part of its work, and a little big of digging from Money Marketing uncovered it was actually a two-man band advice firm just down the road from […]
The end of the “boom” in pension transfers could be in sight, consultancy the Lang Cat predicts. The Lang Cat has published its latest platform market scorecard, which found pension gross inflows to platforms dropped 16 per cent in the first quarter of 2018 when compared to the fourth quarter of 2017. This was compared to […]