Term assurance - In terminal decline?

“For example, asking ‘Have you been to the doctor in the last five years?’ people think ‘Well, I had a few sniffles or I broke my arm, do I have to put that on?’
“Once you get those type of questions, it either becomes difficult and customers might decide not to proceed, or they guess and so are not necessarily filling in correctly, and potentially there isn’t going to be a payment because of non-disclosure,” she added.

While some of this non-disclosure risk is likely to be mitigated by the introduction of the new insurance contract law, with the onus put on the insurer rather than the customer to convey the correct information, it still makes the process daunting to potential clients.

Mike Aldridge, sales director at London & Country, agreed with much of Cuming’s assessment, but also noted a polarisation of products between online and advised offerings beginning to take shape.

“The biggest thing is a move towards very stripped-down products, which are good and serve a purpose and, if it means more people take up protection, can only be a good thing. The danger is if it is at the cost of more people being loaded or potentially declined, then that is a bad by-product.

“So, we’ve got the direct-to-consumer fit product at one end, while at the other end we are getting this advised-based model. The polarisation is fine if you’re an adviser and have access to those products because you can say although these are the cheapest, they don’t include things such as terminal illness or all those other things hidden behind the scenes.”

While product differentiation may be taking the market in one direction, Aldridge noted that the impending deadline surrounding the implementation of gender neutrality, among many other factors, was now beginning to have a serious impact on advice being offered to clients.

“We’re mentioning it, but what we’re not saying is it is definitely going to get more expensive. Some people are saying it is going to be more expensive for everyone, but we can’t commit to that, which is frustrating because it will be good to know where it is going to go,” he said.

This is a point many in the industry have picked up on, with a common thought being to encourage buying any protection currently being considered sooner rather than later with the option to rebroke next year if contracts or premiums improve unexpectedly.

From an insurer’s point of view, Andy Milburn, head of marketing at Ageas Protect, suggested the move towards gender neutrality and other regulatory impositions could be positive for the market.

“There is a window of opportunity for advisers with large numbers of female clients on their books to do something next year, which they’re not going to have the chance to do after.

“Following that, there is a chance to see what providers are going to do to target male customers. The new r­egulations are all overlapping, with all kinds of things going on and they’ve all got a ripple effect,” he added.

Addressing advisers’ concerns and observations, Milburn agreed insurers are changing the way they offer products, but vowed that IFAs would remain crucial despite predicting a growing foray into the sector from online aggregators.

“The divides will be greater over time as aggregators start to figure out what their long-term protection strategies will be and start implementing them. We’ve not really seen aggregators having a major presence yet in protection, but they will do.”

And what of questions about providers strict underwriting rules and wanting only the cleanest of lives? Milburn has sympathy with those concerns. “Other countries actively use the UK as an example of how not to implement future strategies,” he said.

“For example there are a few companies in Australia trying to set up price aggregators and the other insurers who write life and disability are refusing to deal with them. “They know they’ll head down the UK route as soon as they start, so sadly with a consumer driven marketplace price is seen as the most important decision and once you’ve headed down that route you can’t get out of it.

“Now that’s great from the customers’ perspective but means we’ve now got half the number of providers in the marketplace than ten years ago,” he concluded.