When addressing a client's protection needs, most products deal in the term space. But with people potentially outliving these contracts, Owain Thomas looks to whole of life for rejuvenation.
Good things come in small packages, we are often told. Well, in some cases, it's not just the package that is small, but the shop it came from.
Such is the case with the whole of life (WOL) market.
With estimates of just 20,000 traditional-style plans and a further 2,000 to 3,000 unitised plans sold each year from a handful of products derived from a few providers, many feel it has become largely ignored, even irrelevant.
Only the guaranteed over-50 funeral plans market is seeing strong performance, with about 400,000 of these policies bought annually, the vast majority being unadvised purchases.
But hope may not be lost just yet. Alan Lakey, principal of Highclere Financial Services, is one adviser who is sad to see the current condition of the market.
Small talk
"Going back 20 years, there were about 40 or 50 companies offering whole of life," he said.
"People loved the concept of the early flexible products, which had a kind of surrender value built into it, so they got a few quid back. While it wasn't a savings plan, it appealed to their need that they should get something back.
"It's a hell of a shame the market is so small now because like mortgage endowment, it's got its place. Unfortunately, they've been misused in the past as lots of firms sold WOL as savings plans because they paid more and clearly that's not what they were intended.
"But I can think of a couple of clients of mine who, while they don't have a lot of money, they are determined to leave their children something even though there's a house already," he added.
Unfortunately, if Lakey's worst fear is correct, there could be a far greater concern for those working in the sector. Following a recent client experience that saw a reviewable premium more than double, he is concerned IFAs could face significant complaints levels and potential regulatory action if clients protest they were not correctly advised of the changes. This could be magnified by the ominous glare of claims management companies (CMC) targeting the sector.
"CMCs are saying that one of the things they have on their list after payment protection insurance is WOL plans," Lakey explained.
"If you are looking for a potential complaint, I can see many people at the end of their ten-year review saying ‘I didn't know it was going up'.
