Life assurance – not all it seems

Dominic Thomas
Dec 2022 • 11 min read

When life assurance is not all it seems

Life assurance is one of the few solutions to the question ”how can I help?” when posed to a family that has just experienced permanent, life-changing loss. Over the three decades that I have been advising clients, this is, without doubt, one of the most challenging.

Most of us live as though we have an abundant supply of tomorrow. Rarely does anyone really wake and decide that life assurance (or any financial protection) is the major task to get done today.

Death is of course a subject that literature and our culture regularly address, yet in those intimate spaces of our lives, it’s a topic rarely discussed, perhaps one of the last taboos. This was never more starkly revealed to me when (many years ago) someone told me not to talk of death and Wills because he believed that it would make it a reality. Naturally he never became a client (I only work with mortals).

LIFE ASSURANCE – BAD SISTERS

I was intrigued by a series on Apple TV called ‘Bad Sisters’. I enjoyed the series, but wanted to address the premise of the drama – which confused me initially. I will not ruin the story at all by simply saying that a claim against a life assurance policy is being challenged by the adviser, which in my world does not reflect the truth.

A WASTE OF MONEY?

Advisers arrange financial protection (life assurance, critical illness cover and income protection). These are all policies that everyone takes out hoping to never have to claim on them, because to do so means something awful has happened to you. We all actually want the cover to be a ‘waste’ of your money… though using as little of it as possible to secure the right, most appropriate balance of cover.

MAKING A CLAIM

In the event of a claim, it is the insurer that assesses the legitimacy of a claim against the policy terms. In the case of life assurance, it is fairly evident if a claim is valid (the assured has died). In more nuanced cover (income protection and critical illness), the assured is alive and unwell, the question is therefore “is the condition being suffered covered?”. In both circumstances fraud is not uncommon, though I would suggest it is pretty rare and most claims are paid out fairly swiftly and appropriately. An oversimplified for instance, is that a broken arm is not grounds for a claim for a critical illness or inability to work long term, the loss of an arm, however may be grounds, particularly if you are a surgeon.

BROKER BEWARE…

The series, whilst set in Ireland and therefore not regulated by the FCA, has the insurance broker Claffin & Sons investigate a claim for life assurance. Whether in Ireland or here in the UK, this is an alarm bell for authenticity. The small family run insurance broker is reluctantly run by son Thomas Claffin after his father committed suicide. Early on it is evident that all is not well, a database of no policies and concern about the collapse of the business. This is not how things work, unless fraud is being committed.

I can assure you that in the event of a claim, I and probably any adviser will be eager to get you funds from the insurance claim as this is probably the most obviously meaningful aspect of our work, protecting you and your family when disaster strikes, providing funds to make the financial pain disappear. Advisers will certainly want to ensure that a claim for the more complex cover is worth claiming for (broken arm example), but will then seek to hassle the insurer for agreement and payment of funds to you the claimant. Some insurers are better than others in terms of efficiency, but we have never had a valid claim refused.

Claffin didn’t arrange cover, they simply committed fraud, taking and living off the premiums and hoping that their clients didn’t make a claim. That is fraud (honestly I am not spoiling the excellent series and plot).

A PAPER TRAIL WELL DOCUMENTED

You will have a policy document with an insurer and be paying monthly premiums or in some circumstances, annually. These will show on your bank statement and are not paid to the adviser or broker. Even with all the mergers and subsequent name changes for the insurance company you are paying, you will receive a plethora of correspondence, the main challenge being to keep up to speed of who say Commerical Union, Clerical Medical, Friends Provident, Skandia (and so on) now are. You have a unique policy number. If in any doubt get in touch. If you are unsure if you have enough financial protection or perhaps too much now, please ask.

As for the series by Sharon Horgan, I thoroughly enjoyed it. My purpose here is not to suggest otherwise, merely to explain how an insurance claim would work in practice. Here is the trailer for the series, with a cast that includes….

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Life assurance – not all it seemsJemima Thomas2023-12-01T12:12:41+00:00

NHS & FRONTLINE STAFF – COVID19

TODAY’S BLOG

NHS & FRONTLINE STAFF COVID-19

I came across a good article (26/03/2020) by Moira Warner, a manager at Royal London. I have made some minor alterations, but otherwise this is a piece not written by me. I am therefore thankful to Moira and Royal London and take responsibility for its reproduction, noting that the article has the usual social media sharing functionality anyway.

As the volume of overtime undertaken by frontline NHS staff increases exponentially in response to the Coronavirus crisis, we think an update on the pension issues potentially impacting doctors is timely.

CLINICIANS AND THE TAPERED ANNUAL ALLOWANCE

Changes to the tapered annual allowance announced at the March 2020 Budget and expected to lift all but the highest paid out of the “taper trap” are due to take effect from 6 April 2020. In view of the impact the exceptional amount of additional shift work is having on the threshold income of healthcare professionals right now, it’s worth remembering the interim measures put in place for clinicians who may face an annual allowance tax charge in relation to tax year 19/20.

In England & Wales, NHS employers will pay clinicians’ annual allowance charges incurred in 2019/20. This is achieved by the employer making a contractually binding commitment to “fully compensate” the individual for the impact on their retirement income of a “scheme pays” deduction.
In Scotland, NHS staff have been given the option of taking the value of their employer’s pension contribution as an addition to basic pay.

AWAITING CONSULTATION

We’ve not yet seen a Government response to its 2019 consultation on increased flexibilities for the NHS pension scheme, although the Chancellor has confirmed that proposals to allow senior clinicians to receive extra pay in lieu of pension contributions will not be taken forward.

It may be that the dust gets brushed off some of these previous proposals, if it turns out that the overhauled tapered annual allowance doesn’t go far enough to protect the most dedicated NHS staff working the longest hours from an annual allowance tax charge.

NHS RETIREES RETURNING TO SERVICE DURING THE OUTBREAK

In a widely-anticipated move, the Government is encouraging retired health and social care professionals to return to the NHS to join the fight against Covid-19. In order to prevent post-retirement employment having disadvantageous consequences for the pension income of such individuals, emergency amendments to NHS pension regulations have been tabled.

These form part of the Coronoavirus Bill 2019-21 which received Royal Assent on 25 March 2020. The amendments (which the Government will have the power to implement immediately or retrospectively) apply across the United Kingdom and have 3 effects:

The pension income of special class status holders who return to NHS employment won’t be abated (suspended). Special Class status holders are nurses, physiotherapists, midwives and health visitors in post on or before 6 March 1995 and Mental Health Officers (MHO) with at least 20 years’ MHO experience and in post on/before 6 March 1995. The wider pension abatement rules remain unchanged. In particular this means that individuals who retired “in the interest of efficiency of the service” could still have their pension suspended on return to work.
The pension income of 1995 Section NHS members who return won’t be suspended if they work more than 16 hours per week in the first calendar month following retirement.
Members who have flexibly retired using the NHS “draw down” facility will not be required to maintain a reduction in their pensionable pay of a minimum of 10%

There is no proposal to amend regulations prohibiting pensionable re-employment of 1995 section retirees. Any clients who have retired and drawn 1995 section benefits will therefore be able to return to the NHS, but will not be able to resume pensionable employment under the NHS pension scheme. Employers will need to enrol returners who are eligible workers into an alternative pension scheme.

Please also note that these measures are temporary. The Government has stated that a six month notice period will be given to staff and employers before they are disapplied.

DEATH BENEFITS

Recent social media chatter suggests there’s concern amongst health care professionals who have made taxation-related decisions to opt out of the NHS Pension Scheme, that their loved ones will no longer be entitled to any scheme benefits in the event of their death. So clients need reassurance that this is not the case.

Although the loved ones of individuals who’ve opted out will no longer be entitled to death in service benefits if the deferred member passes away, they remain entitled to death in deferment benefits. These include a lump sum death benefit and both eligible adult survivor’s and eligible children’s pensions.

Further details on calculation of these benefits can be found in the 1995/2008 and 2015 NHS pension guides for England and Wales – as well as the guides for Scotland and Northern Ireland.

If you wish to consider additional life assurance cover please get in touch. Given the current context, applications for minimal levels of cover, before requiring medical underwriting would likely be the most prudent approach.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

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The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk
Call – 020 8542 8084

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

NHS & FRONTLINE STAFF – COVID19Dominic2023-12-01T12:13:19+00:00

Bare Foot Obsession

Solomons-financial-advisor-wimbledon-blogger

Bare Foot Obsession

There’s something terribly predictable about the new show to arrive at The Barbican. Obsession, staring Jude Law and Halina Reijn is the very familiar tale of old man, young wife, cuckolded by a visiting younger man. A storyline so old that even Chaucer may have asked “ Whyts newe?”… as it turns out, very little… even a few clumsy lines about being a beneficiary of the life assurance policy (for an unimpressive £50,000).

Once again audiences are treated to a minimalist set, which at The Barbican, feels like an empty expanse – which merely serves to underline the empty script. One can only assume that the bowling lane size TV screen that rises in the final sequence, must have consumed the entire budget. The Director, Ivo Van Hove seems somewhat obsessed with actors running barefoot across the stage and when not bare-footed, bare-chested which is not as radical as I suspect he believes. In truth, no amount of talented acting could really rescue this production, which feels and looks pretentious, carrying the gravitas of a sixth form script.

NT Live Obsession Landscape Listings Image International

Obsession-Halina-Reijn-and-Jude-Law-image-credit-Jan-Versweyveld-20

Coupling and Fracture

Whilst I’m not a relationship counselor, clearly most, if not all, relationships have periods of difficulty. Many, perhaps most, find a pathway through trouble, some do not. There are lots of assumptions made in financial planning, but making assumptions about current relationships over the next thirty years or so, clearly is problematic. That’s why it is important to express your values, not simply your goals for your life. Understanding, or at least, being aware of the differences in attitudes towards money, how its handled and what its for is fairly fundamental for most couples. Yet economic power, or the lack of it can wreck or enhance a relationship, depending on who you really are. A reality displayed regularly within various “media” who pick over the disintegration of any “celebrity” relationship.

So a decent financial plan will touch (carefully) on these issues, a really good one will help a couple to face areas of “non-alignment” and furnish them with thoughtful options. In drama, a bad script can sometimes be salvaged by good actors or direction, but not always. When it comes to financial planning, you write your own script and having an impartial observer can make all the difference to a worthwhile story.

The Car Man

As for “Obsession” it didn’t leave much of an impression. The dramatic tension left almost as soon as it arrived. If you wish to see a much better retelling of this story, without a script, I can thoroughly recommend the ballet, The Car Man by Matthew Bourne… a guy that knows a thing or two about storytelling without using words.

and here is the trailer for the play…

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Email me to get in touch

Bare Foot ObsessionDominic2023-12-01T12:18:36+00:00

Jackie and grief in 1963

Jackie

I doubt there are many people over the age of 40 that do not know about the assassination of the American President… number 35, John F. Kennedy. One of the most iconic Presidents of American history helped somewhat by the charms of his wife Jackie. It is likely that you would have seen more than one movie about JFK, but not that many about his widow Jackie.

The film is of course, centred upon the assassination and its immediate aftermath. Retold, this time, from the given perspective of the then First Lady. Jackie Kennedy (played by Natalie Portman) suddenly became a widow at the age of 34. Her husband 12 years her senior had only been President for 2 years 11 months. Yet their brief “Camelot” was full of incident.

Grief on Display

Grief is of course a daily reality. We all lose people that we love. It is a deeply painful experience. When the effective Head of State is assassinated, an entirely different set of circumstances are presented to the grieving family and friends. There are practicalities of a ceremony to which dignitaries are expected. In this case JFK was killed on Friday and buried on Monday. This is set against the backdrop of anxious security forces on high-alert, not yet knowing the who, what, how many or why JFK was assassinated. A hasty usurping of position and removal from a home, albeit a temporary one. How to “behave” and conduct oneself? It is perhaps reminiscent of the thoughts that must have concerned the Royal Household when Princess Diana died nearly 20 years ago, albeit in very different circumstances, but the same dilemma – how to display grief.

1963 annus horribilis

The film touches on the wider context. Only 15 weeks earlier, the couple had lost their third child Patrick, just 2 days after her was born to infant respiratory distress syndrome. On Friday 22 November 1963 JFK left a wife and two small children, Caroline 5 and John 2. Both children had their birthdays that later that month, John Junior’s was the day of the funeral. Tough for any “normal” family to come to terms with. Certainly Jackie would be entitled to call 1963 her “annus horribilis”.

The truth about life assurance

Life assurance does not provide comfort. The financial services industry has always struggled to market life assurance and persuade people of its merits. It is a product that is only payable when a horrible event happens. What it does provide is the financial resource to continue, to go on, as gradually those left behind rebuild their lives. I have witnessed the benefits of life assurance and the strife caused by not having enough. I cannot overstate how important it is. The question of how much cover is really required will vary from person to person and how well resourced you are. It will also depend on how you have arranged your Will and your estate.

It is unlikely that your loved ones will be under the degree of pressure that Jackie faced, within the eye of the world’s media. However, you can plan to make any such event considerably easier than it might otherwise be. It is time to ensure that your own house is in order.

Here is the trailer for the film, for which Natalie Portman has been nominated for an Oscar as Best Actress in a leading role.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Jackie and grief in 1963Dominic2023-12-01T12:18:44+00:00

Loss and Manchester by the Sea

Loss

Coming to terms with loss is perhaps one of the more significant aspects of the human condition. As a financial planner, loss is normally thought of in terms of the value of investments falling and how much money is ‘lost’. However, financial planning isn’t really just about money, its about planning your life (as far as one can) and then building financial architecture to deliver the plan.

A financial planner will also reflect on your loss and the impact that this would have on your financial plan and those that you leave behind. A really good financial planner will also help you think beyond your own family. How would your children be cared for if both parents are no longer alive? What are the practical implications for those appointed as Guardians or Trustees?

A Deep, Dark Sea of Despair

Manchester by the Sea is a film that has been short-listed (amidst some controversy) for a lot of awards . Its well acted, but its grim. Little good happens and worse still, the main character (Lee Chandler played by Casey Affleck) doesn’t seem to find any real sense of resolution. The traumas experienced are raw and undeniably bleak, yet there is no sense, or perhaps, I had no sense that the lead character was ever going to be able to process what happened with any degree of resolution. Admittedly he faces horrendous set-backs (understatement) which would always be very difficult to overcome, they are life-changing.

I couldn’t do without…

It is still a surprise to me that so few people have a Will – something that every adult really needs. Most do not have adequate levels of financial protection in place. You are your biggest asset, yet many people are more likely to have insurance on their drains, pets, smartphone or washing machine than on their own life, or a lifetime of income… the very thing that pays for the drains, pets, smartphone and washing machine.

The Predictability of Loss

We all know that we will experience loss again in our lives, it is a regular feature and one for which we can prepare to some extent. So why not ensure that if you have agreed to be a Guardian or Trustee, that you know what to expect. Similarly have you discussed with your appointed Guardians or Trustees some of the key concerns you might have? The how, why, what and when of your Will and the implications for how your family are cared for.

It is my hope that you never need to claim on your financial protection. Doing so implies that personal tragedy has occurred. There is the rather strange dynamic where I hope you never need what we arrange. If it is needed, then at least the comfort is that you had prepared as well as you could for those that are truly important to you.

So if you are now suitably prompted to rethink your value, please get in touch. If you’d like to know what to avoid with some better communication, here’s the trailer for Manchester by the Sea.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Loss and Manchester by the SeaDominic2023-12-01T12:18:53+00:00

Start with the end in mind

I think it was Stephen Covey that coined the phrase “start with the end in mind”, I’m sure others thought of it before, but he certainly used it successfully. When it comes to financial planning, it is where most good financial planners begin.. but being British, it’s arguably one of our last taboos… how we think of death.

For many, the last year (2016) was full of high profile celebrity deaths. Hardly any of us actually knew these people, but we probably saw some of their work with varying degrees of impact.

At the end of the year Carrie Fisher died rather unexpectedly, followed 24 hours later by her grieving mother Debbie Reynolds. It was, and is, a poignant moment. One of the questions that I didn’t expect to ask myself was “what happened to the estate?” (as of now, I don’t know). If the estate was set up like most, the children are normally the beneficiaries… so I wondered what happened to Carrie’s estate which was then presumably a recipient of her mother’s – at least in part. An interesting case for the lawyers and an eager death duty office.

Lessons Learned from 2016?

Despite all the outpouring on social media and around dining tables about the sadness at the loss of X, Y or Z, there was no evidence that anyone prepared their own ending any more thoughtfully. There was no sudden demand for Wills or life assurance, or end of life plans.

According to ABI data, the UK is the fourth largest market for insurance. In 2015 129,000 families or individuals received a payment from protection products. Now I’m guessing that those that have some cover, probably have more than one policy. So there may be some doubling up with the data, but in any event the ONS reported 529,655 deaths for England and Wales in 2015 (up 5.6% on 2014 and the largest increase since 1968). So whilst clearly not everyone dies with dependents or liabilities, a significant number had no cover at all.

Most people do not have enough cover

Despite the warnings all around, that death eventually comes to us all, some much sooner than expected, most of us do not really give it too much thought. Its one of the easiest things to put off. Sadly I have seen the results of unexpected and early deaths and the impacts on families and whilst money would never replace a person, it would certainly have provided a very different future for the family left behind.

Don’t ignore the signs. Start with the end in mind.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Start with the end in mindDominic2023-12-01T12:18:56+00:00

A Matter of Life and Death

A matter of life and death

It is one of the strangest aspects of conversations that I have with clients. It gets stranger and perhaps more difficult the older they become. We have to talk about a matter of life and death.

In essence, when all is said and done, financial planning is about trying to ensure that your money does not run out before you die. So we need to have a conversation about when that might be. We don’t know the answer. Death is a daily part of life, yet something that most of us manage to avoid talking about.

The motivation behind the question is obviously to attempt to make money last long enough, however it is also designed to prompt thoughts about what is life about, what do you want from it during this brief sojourn on this wonderful planet?

Thoughts may turn too quickly to estate planning and reducing inheritance tax, rather than considering the true inheritance that is being left…. the memory and impact of .. well…you!

I might (will) point to the financial impact of your loss to those dependant upon you, be they family or your business, but we all know that its much bigger and deeper than that don’t we. So good financial planning can take care of financial loss, but great financial planning will hopefully remind and inspire you to ensure that you make the most of the life you have now.

Another way to view death – acceptance

A dear friend of mine, who has had more than her fair share of grief drew my attention to this short video about death (and life). It combines images from various films and words of Alan Watts. It is worth taking the 3 minutes to watch it.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

A Matter of Life and DeathDominic2023-12-01T12:20:07+00:00

Do You Need Financial Protection?

A question I’m often asked is do I need financial protection? frankly this is rarely the question… most people are really asking if insurance is worthwhile. Given the scandal of PPI, and a general mistrust of financial services, it is little wonder. Add in the reality that there is a general assumption that such contracts are designed to favour the insurer and the lawyer involved, many question whether the insurers would ever pay out.

OK, there is little I am going to be able to say to convince anyone that is suspicious about “the system”. All I can do is point you to data about claims paid and also relate my own experience. In all the years I have been advising clients, I have unfortunately had a number of claims. All of them were accepted, only one was not paid out at the full amount (they paid 73% citing non-disclosure of material health matters). We are currently considering whether to contest this or not, I can see both sides of the argument – but obviously represent my client, so will represent his interests.

In essence there are really only three types of financial protection I deal with for individuals. So let’s cover what these are.

1. Life assurance – you die, it pays out. Price is everything, there is pretty much nothing between providers on terms and conditions, however there are a myriad of types of life assurance policy and enormous differences in cost.

2. Critical Illness Cover – this is much more contentious. Terms and conditions are everything, quality is upmost, price is secondary – you pay for what you get. However cost still varies enormously. This cover pays out if you are diagnosed with a serious medical condition – it pays you. The main conditions are cancer, heart attack and stroke….all stuff that most of us would prefer not to think about, but probably know several people (depending on your age) that have experienced this.

3. Income Protection – this pays your income if you cannot work due to incapacity and an inability to return to work. Generally cover would pay until you are better and can return to work, or until the policy maturity date (invariably your retirement date). It isn’t so contentious, these days a lot of employers provide cover. Certainly terms are important – most basic being does it pay out if you cannot do your job or any job or any job for which you are suitably skilled/able. Cover is always less than your total income, as this provides an incentive for the claimant to “make a recovery” and also reduces fraud. Cost varies considerably. Generally cover is a percentage of income, up to a maximum and starts typically after 3, 6 or 12 months of “being unwell”… the longer this “deferred” period, the cheaper the cover. This isn’t accurate… but gives you an idea.

Which job would you prefer?

Job A: £60,000 per annum

Job B: £59,500 per annum plus £38,675 per annum until 65 if you have a long term illness.

As I say, its not accurate, lots of if’s but’s and maybe’s…. but hopefully I am conveying the concept.

So how much cover do you need?

That depends entirely on your circumstances, the cost of your lifestyle, your age and your level of debt and if you have anyone that is relying on you. It is generally true that the more you need cover, the less you can afford it… think of a young family who have a tight budget…precisely because they have a tight budget they need cover. Some people don’t need any cover (because they have ample resources). In essence they are self-insuring, however some of these people would prefer to pay for insurance so that they pass the risk to the insurer rather than bear it themselves, so using funds for other, more enjoyable purposes.

Reviewing Cover

So you have a load of old policies. You have some cover. Sometimes it isn’t a good idea to change the cover – the policies where terms and conditions matter generally are weaker and more vague these days than they once were. However some can be reviewed. Don’t forget on the whole your debt should be reducing and you and your family, if you have one are older, less dependent.

Financial Times (FT) Financial Adviser Awards 2015

Yesterday I attended the FT Financial Adviser Awards – having been nominated for “Protection Adviser of the Year”. I’m pleased to say that it was a podium finish (2nd)… which isn’t bad (the winner is a thoroughly good adviser that I respect – genuine congratulations). Of course I would have preferred to win – but hey, out of 24,000 advisers in the UK… I, like Nico Rosberg need to keep improving. However I don’t really know the exact reason why I came second (unlike F1 there isn’t a final lap chequered flag. I assume it cannot be based on the amount of protection business I arranged over the last year (consider the big networks of advisers or Bank employees), so I presume it is the quality of the advice process, perhaps also because I have always removed commission from protection policies (reducing the cost for clients) which is still unusual and not a regulatory requirement of “adviser charging rules”. Perhaps it was the case study, business model or interview that revealed the quality rather than the quantity of our protection advice. At this stage I don’t know, but what I do know is that if you find yourself in a nightmare scenario – the inability to earn, or life threatening illness or worse – suddenly bereaved, having cover in place that removes financial stress makes all the difference in the world. Because sometimes in life stuff happens that we don’t like.

Dominic Thomas

Do You Need Financial Protection?Dominic2023-12-01T12:40:06+00:00

The End is Nigh

We’ve all seen some rather sad looking types, clutching signs declaring that the end is nigh, if not on a high street somewhere, perhaps within a film. Occasionally I ponder what makes anyone do this, but most of the time, I dismiss it as a form of madness and delusion. Yet, I suppose there is a sense that the end is always here. Something or someone is always at the point of extinction. Death is very much a part of life, albeit an often unacknowledged one.

In commercial terms, innovation is the lifeblood of a thriving business, of course I really mean the right type of innovation. Kodak and Polaroid were innovative, but not in the right places. Similarly the F1 racing teams are all innovative, but two have failed to complete the season due to financial woes and being unable to remain solvent. The world moves on.

So it was with a degree of mirth that I came across a new advert about the extinction of the Independent Financial Adviser. I can take a joke (I hope) and am not criticising Beagle Street for their advert, but as with most things, getting some facts right invariably helps. For starters, pretty much anything that helps the UK public to look after themselves financially is a good thing and certainly life assurance is a financial product. Cost is often the main criteria for term assurance, but there are also questions about Trusts and how the cover is set up… knowing a little can sometimes be more dangerous than knowing nothing. Sadly, the content of the Beagle Street advert suggests that they neither understand the market or those within it, which does rather patronise the audience. Admittedly there are some valid points – jargon, bureaucracy, complexity and waste… though much of this was (and still is) due to regulation (designed to protect) and Government – designed to… well… distract.

Beagle Street are right in asserting that the days of advisers arranging life assurance as they used to are over, but then those that arrange products have had their days numbered for many years. The adviser that they seem to describe is someone from a bygone age and probably is more representative of “the man from the Pru” who used to turn up on your doorstep to collect a few pennies for a savings plan. That was way before my time (1991). In a world that has shifted from “Buyer Beware” to “Seller Beware” (Dan Pink – To Sell Is Human) anyone simply selling “Product A” is unlikely to be successful, even comparing A with B and thinking others cannot do that for themselves is definitely looking at a short career. Advisers are at the hub of the money relationship, providing contextualised, accurate, professional, independent advice – and paid for doing so. Admittedly I tend to only attend events with high calibre advisers, most of whom would call themselves planners – so my experience is possibly not entirely representative of all 20,000 advisers. Anyway, news of my death has been exaggerated…

Oh and for the record, Beagle Street are not independent, they are a representative of an insurance company. So for all the talk of evolution, they haven’t even evolved as much as those adorable meerkats… also what is the current obsession with things that look like “monsters” or “gremlins” in TV adverts these days… have the Ad Agencies really got so few ideas?

Dominic Thomas

The End is NighDominic2023-12-01T12:39:35+00:00

G-Day – nothing to do with Australians

G-Day Something Down Under?

G-Day has nothing to do with Australians, but one might chuckle that it has something to do with down under. G-Day is actually Gender Change Day… yes you did read that correctly (no I didn’t – its actually Gender Directive). Before you start shouting at your computer that you’ve just about had enough of excuses for more greetings cards, this is in fact a European… no, not yet…directive (hold on) that makes it illegal for insurers to discriminate between male and female. In other words men and women must be charged on the same basis – much like this week’s news that equal pay for equal work, except of course that when it comes to insurance, there is nothing so unfair as equality. Eh? What I mean is that women live longer (sweeping generalism, but generally true) so they get cheaper life assurance. Now they won’t. It also applies to car insurance and annuities, in fact any insurance.

Brussels for Christmas?

So in the interests of showing what this may mean (because the truth is that we don’t actually know yet…. remember I am something of a truth fan, despite the cost). Anyway a fairly major insurer emailed me yesterday (Liverpool Victoria – credit where it is due). G-Day is set for 21 December 2012 (21/12/2012)… methinks that the Brussels powers like amusing numbers. Anyway the table below is LV’s attempt to outline their take on potential changes.

Product type	Currently, on average…	Potential impact of Gender and I minus E changes**
		Male	Female
Income Protection	Women pay 65% more than men	+20%	-28%
Critical Illness (with Life)	Men pay 10% more than women*	+6%	+16%
Term	Men pay 10% more than women	+3%	+22%
Underwritten Whole of Life	Men pay 20% more than women	-5%	+15%

As all tables come with a caveat or two…..”There are so many factors affecting premiums that it is impossible to give a single definitive figure that will apply to everyone. The extent of change will vary by provider, will differ by product class and be determined by the individual circumstances of the client. Added to this, we expect to witness a fair amount of re-pricing activity in early 2013 as providers attempt to get to grips with the new gender neutral world.”

More Unintended Consequences

You will quickly gather, that women will be paying more for most insurance. I’m going to stick my neck out and guess that this probably was not the Eurocrats intention. What it does mean is that you will probably need to review your protection arrangements if you are a woman with income protection. Admittedly this is one insurers take on life, but LV are generally pretty competitive. They also have a dedicated website called “no more guesswork“.

Early Christmas for commission hungry insurance salespeople? surely not!

I may have bored you senseless about the new adviser charging regime starting on 1st January 2012. Ironically this does not apply to insurance, so I’m guessing that commission based advisers will be fairly eager to get people to switch their cover (generating new commission) so be warned. There will will be some advisers (like ourselves) who simply charge a fee for the work and remove the commission entirely. I write this as yet another email arrives telling me that a very well known company can offer me even more commission with their new charging structures (note it wasn’t LV).

G-Day – nothing to do with AustraliansDominic2023-12-01T12:23:06+00:00