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On protection: Price is no longer the only criteria – McKenna

by: Ian McKenna, director at Finance and Technology Research Centre
  • 09/03/2018
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On protection: Price is no longer the only criteria – McKenna
Historically, life insurance premiums have been primarily compared on price, but this is no longer the only criteria.

 

Protection should be an integral part of any mortgage advice process, but the length of post Mortgage Market Review (MMR) interviews means anything that can streamline providing fully compliant protection advice should be welcome.

The Exchange, now owned by Iress, was the original industry comparison portal which replaced primitive 80s Videotex systems in 1992. It continues to be one of the most popular comparison services.

 

Competitive innovation

In the late 1990’s Assureweb was set up as a competitor to the Exchange. This was acquired by iPipeline in 2012 who continue to offer the Assureweb service as well as an increasingly popular multi policy benefit system called Solution Builder.

This latter system enables advisers to compare multiple products under a single contract and with each benefit split out individually. From our discussions in the market it is proving very successful at helping advisers achieve multiple sales to clients to more comprehensively address their needs.

Another system which has an outstanding track record when it comes to helping advisers provide a fuller range of cover options is Lifequote from Direct Life & Pensions.

This takes the client through a streamlined but equally thorough fact find process to identify the optimal range of protection benefits. It then enables the adviser and client to explore what best fits the client’s budget.

Direct Life & Pensions also take responsibility for any additional underwriting processes necessary and organising the completion of trusts and other necessary documentation.

 

Quality not price

There is a growing view that price should not be the only measure of protection products, as in recent years insurers have focused more on delivering enhanced policy wordings and benefits.

A number of systems have emerged over the last few years that consider the qualitative features of life insurance products.

These include CI Expert, which focuses on the differences between the policy wordings for critical illness contracts, and includes the ability to compare new policy wordings with a library of wordings for older critical illness plans where the adviser wishes – to validate if it can be justified to switch from an older contract to a newer one.

CI Expert only addresses critical illness plans. By comparison, the Quality Analyser (full disclosure this is built by the author’s company) covers the full range of quality features for all term protection products i.e. critical illness, mortgage protection, level term, income protection and business protection.

It does not however compare old policy wordings for replacement business, although I understand such cases only currently account for between 10-20% of new policies.

 

Rumours

Defaqto also offer a protection research service, while perhaps less comprehensive than CI Expert or Quality Analyser, industry rumour is that they have a new product coming that may include legacy wordings.

Finally, Synaptic Webline is the only current service combining price and quality data, although again perhaps less comprehensively than some of the newer offerings.

With increasing regulatory scrutiny of protections sales advisers should consider quality, as well as price, when making recommendations and the technology now exists to make this easy.

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