Fiona Murphy finds a ‘vibrant' and ‘growing' whole-of-life market compared with its term assurance sister
He said: "Advisers need to give a more holistic service to their clients and they need to give a better service to the fewer customers that they see. From what the customer gets out of taking out a whole of life plan, they know regardless of what happens, they will get something back, it is like an investment as well as a protection policy.
"Customers often intuitively go to whole of life plans because there is a 100% chance of payment -unfortunately there is still a perceived lack of trust in financial services, when it comes to WOL, by definition everyone will receive a pay-out compared with a 10 year term assurance product."
In terms of Aegon's customer base, Grant concluded: "We see a vibrant market for this and our target market is all about older wealthier clients and business protection as well."
This is something that Ben Heffer, insight analyst at Defaqto touched upon in the January 2015 survey on Term Assurance.
He said: "When the protection market was driven by mortgages, selling a 25 year term policy was fine. Back then, there was a distinct point where you stopped being a worker and became a retiree. Now people are working longer and retiring later.
"So selling a 25 year policy is old hat and once your term policy comes to an end, you may not get the same underwriting terms or premiums you previously had."
Whole of life seems to provide a lot more certainty, particularly on the medically underwritten side, due to the way the product is structured to provide more certainty.
Product developments
So what happened in terms of product development and new offerings during 2015?
In the over-50s space, the market leader Sunlife launched a premium cap option for its Guaranteed Over 50 Plan enabling customers to cap how long they pay premiums for.
SunLife also said that it was investigating a protected pay-out option which would enable over 50s plan customers to receive a portion of the total sum assured if circumstances mean they are unable to continue paying premiums.
This is good news for the over-50s market as typically if policyholders stopped paying premiums, their beneficiaries would not receive a lump sum payout following their death. Additionally, people often put more money in than they ended up getting out at the end in many over-50s contracts.
This was a real big issue as policyholders may have had to stop paying premiums due to a change in their financial situation. This has become a growing trend as more retired people are in mortgage and credit card debt than ever before.
Another key development in June last year was that fact that, Lifequote added a whole of life comparison service, after research found IHT and estate planning are adding to the demand for policy take-up.
Neil McCarthy, sales and marketing director for the comparison service's company DirectLife explained that the decision to launch this was due to the fact that whole of life products are increasingly in demand among advisers.
He said: "As a business we are working with more wealth managers, historically we worked with mortgage brokers, which aren't really the audience for whole of life plans. There was a gap, it was important that we filled it, we provide the full admin service for WOL. We put the main insurers on the system as quickly as possible and we wanted to offer max functionality such as joint life.
"We are seeing interesting new uses for WOL such as accelerated payments for long-term care to make that product more attractive. What's interesting is looking to understand the cost of such policies, more advisers are doing term assurance to age 90 and the long profit WOL costs are still a lot more expensive than a term. I think there needs to be some changes in pricing.
"The options to use it are around IHT planning and ways of using it in pension planning to create a definite payment on first or second death depending on the prices and health of the customer. You can use trusts - there are some good quality trusts that enable you to get the right payments on first or second death. It's become more mainstream in financial planning and we wanted to support that. "I think that that later life wealth management will be a key area for intermediaries.
Cigna also entered the affinity whole of life market - meaning that it has developed white labelled insurance products for other brands.
