A study from The Exeter found that more than half of advisers believe this form of abuse is becoming more prominent among insurance clients.
It is calling for more flexibility in insurance products because of the danger of abuse, and now allows joint policies to be separated with consent from just one policyholder and without further underwriting.
“Joint financial arrangements can create significant barriers for vulnerable clients, particularly where there is a risk of financial or economic abuse. It’s important that clients are able to make changes to their cover without unnecessary barriers at what can already be a challenging time,” said Jack Southcott, head of protection proposition at The Exeter.
Why separation matters
Lauren Garrett, financial services manager at charity Surviving Economic Abuse (SEA) said that abusers can exploit joint life insurance policies if there is no flexibility to separate policies.
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“Abusers are exploiting joint life insurance policies by refusing their consent to end them, trapping victim-survivors in unwanted financial ties long after relationships have ended,” she said.
“In some cases, perpetrators weaponise their role as a beneficiary to reinforce threats to kill, leaving survivors living in fear for their lives.”
The Exeter’s joint life cover has a joint life separation option that allows policies to be converted into two single policies following divorce, dissolution of a civil partnership, or separation.
This can be done with consent from just one policyholder and without the need for updated medical information.
Southcott, at The Exeter, says this approach is designed to reduce barriers for individuals seeking to regain financial control after a relationship ends, particularly those who may be experiencing or leaving economic abuse.
“Joint financial arrangements can create ongoing ties that are difficult to break, and in some cases, delays or the need for mutual consent may put individuals at further risk.
“By allowing joint life policies to be separated with consent from just one client, along with straightforward evidence requirements and no further medical underwriting, advisers can help clients maintain continuity of protection and move forward with greater confidence.”
Abuse ‘not niche’
The Exeter study follows a recent conference on inclusion, where experts spoke out about the issue of economic abuse.
Claire Towe, co-founder of Meet Margo, said one in seven women – equal to 4.2 million people – are impacted by economic abuse.
“When we talk about economic abuse, it’s not niche, it’s not abstract, it’s here, it’s in this room, and the likelihood is you have advised somebody, or had a conversation with somebody, who’s been going through economic abuse – even if you didn’t know it at the time,” Towe told brokers.
In addition, vulnerability experts at MorganAsh warned that many firms are missing economic abuse signs by omitting questions on this issue from questionnaires.
