Permanent Insurance has raised its commission to IFAs on pension term assurance to 125% of Lautro fr...
Permanent Insurance has raised its commission to IFAs on pension term assurance to 125% of Lautro from 100% in a bid to increase awareness and sales of the product.
According to Rod Macdonald, sales and marketing director at Permanent, the product is undersold despite enabling the self-employed and people in non-pensionable employment to purchase life cover with the benefit of tax relief.
He said: "There are 27 million people working in the UK but with only 11 million in occupational schemes it leaves 16 million eligible to buy pension term assurance."
While 1998 saw sales of term assurance reach over a million for the first time, according to Swiss Re, pension term sales at 53,000 accounted for a tiny proportion of the market.
Ron Wheatcroft, technical manager at Swiss Re said that sales may be higher than these figures suggest, with a possible 20,000 more policies not accounted for as they are part of an integrated benefit with the personal pension. However, even considering these additional policies sales are still low, Wheatcroft said it is an option IFAs should be discussing with their clients.
Wheatcroft said: "Because maximum pension contributions are limited by legislation, any contributions made for term assurance will reduce levels payable into the pension fund. But in practice most people do not make maximum pension contributions and so there is still a place for it."
Macdonald added: "Under pensions legislation terminal illness benefit and CI cannot be included in the plan. We need to work on the Government to widen coverage."
Wheatcroft said: "For some it is better to put the maximum into their pension so they get maximum tax relief on their pension rather than on the term - it is finding the right balance between protection and retirement benefit."
