Term assurance - In terminal decline?

Want an example of how not to do things? Owain Thomas finds the UK term assurance market’s approach is being avoided worldwide.

Life assurance is about as simple as it gets in the insurance world, but even here the market has become polarised. As the most commoditised of all protection products it has been, understandably, the first one to face any real challenge from internet aggregators and other direct-to-customer propositions.

In response to this, providers are starting to develop separate strategies for their direct and IFA-based offering. But some have noted that even in this, the simplest of protection worlds, clients are becoming confused and disillusioned with some of these approaches, potentially turning them off the entire industry at the first step.
Louise Cuming, managing director of the Life ­Department, said the advice firm had identified several main trends within the term assurance market.

“First, providers are simplifying their offers to try and persuade people to buy online because they recognise that consumers are quite comfortable doing that. So, they’ve built consumer propositions to help customers, but increasingly there are those who don’t fit the bill.

“We’ve seen a lot in the press about Britain being the most obese nation in Europe and this is starting to affect underwriting. So increasingly, there is a part of society that is finding it more and more difficult to get insurance.”

Another of Cuming’s key concerns addresses premium cost, something closely related to her first issue. This may seem unusual at a time when life assurance prices are being driven ever lower and lower, but it appears these advertised rates are only available to the healthiest customers.

Those with pre-existing health problems often do not realise that the quoted premium is likely to be far higher. But perhaps something that highlights the need for advice, even in this most straightforward of sectors, is the quality of the online application process.

QUERYING QUALITY

“We have found over time that although life departments are designing a lot of nice online journeys, the questions are quite in depth and there are often quite a few questions that throw the customer,” Cuming continued.