Is it time for intermediaries to look at whole of life cover as more than an Inheritance Tax planning tool and to take a multi-usage approach, asks Jennifer Gilchrist.
Sometimes the ‘buy while stocks last' message clouds our antennae and we forget to pay sufficient attention to the merits of the actual stock on offer. In the build-up to the implementation of the Gender Directive on 21 December, we have all become so focused on this cut-off date it is almost as if it represents the end of the world - although, by some bizarre coincidence, 21 December 2012 also happens to be the date the Mayan calendar ends (which many people predict does in fact signify the end of the world).
It is pointless to pretend whole of life cover will be immune from the requirement to switch to gender neutral pricing. Exactly what the impact will be depends on factors such as age and smoking habits, but there are estimates in the market that suggest it will result in average rate increases for women of around 10% and average rate reductions for men of around 5%.
However, let us not forget that in the case of a joint-life policy the increases to female rates and decreases to male rates will to a certain extent cancel each other out. Whole of life is a serious product which can be suitable for serious purposes and the buying decision should not be based on the January sales type of bargain hunting.
If we take the view that life will indeed continue after 21 December then sales of whole of life cover industry wide will continue to emerge from their recent dull patch and start to increase. And in case someone challenges that with the fact that Swiss Re's annual Term & Health Watch survey shows total new sales of whole of life cover increased by an impressive 7.9% in 2011 and 16.8% in 2010, it is worthwhile highlighting the difference in outlook.
The Swiss Re definition of whole of life includes "guaranteed acceptance plans", which are usually targeted at the over 50s or marketed specifically as pre-paid funeral plans.
Unfortunately, such plans account for 385,132 of the 400,682 overall whole of life sales recorded by Swiss Re in 2011. In the case of over 50s type plans, these volumes probably have more to do with celebrity driven TV adverts and offers of free radios and Parker pens than they do with the actual quality of the products.
