The sale of private medical insurance can help IFAs plug their income gap, as the limited commission...
The sale of private medical insurance can help IFAs plug their income gap, as the limited commissions available on Stakeholder continue to threaten IFAs' income streams.
Speaking at the COVER Protection Forum, Geoff Maggs, sales consultant at BCWA, said: "The maximum commission payable on Stakeholder pensions is limited to 1%, so IFA income streams will suffer when the new system comes in. Some may make up for their lost income by charging clients fees for their advice, but there may be considerable resistance to this."
He added: "It makes sense therefore to look at alternative income streams. PMI is one of these as is dental insurance, travel insurance and cash plans. For some forms of cover, PMI may offer commission of 15%-30% - clearly well worth considering."
Maggs said that a combination of recent scare stories about the NHS and the growing awareness of the problems an ageing population will bring means many more individuals are much more open to the concept of PMI.
Roz Murdoch, also a sales consultant at BCWA, said that PMI is also becoming more popular as an employee benefit. She said: "IFAs should highlight the benefits of PMI for organisations. These include help in getting valuable staff back to work quickly, reducing sick leave, providing an essential executive perk and helping to compete for staff in a competitive market."
Murdoch added that the product is increasingly being seen as a risk management tool by employers. She said: "PMI can now be seen as a form of risk management, as the employer has the reassurance of knowing that sick employees will be treated promptly and come back to work more quickly than they would if they had to wait for appointments."
