What is a life assurance contract? Yes, it’s a promise to pay when the very worst happens, to create money in times of trouble where none existed before. But it’s much more than that; life plans today have so many features and so much flexibility it’s hard to imagine a client or a life situation that’s not possible to cover or adapt to. But keeping track of all the plan options from all providers, to give the right advice to each client, at the start and throughout the term as their circumstances changes, is quite some job. In this latest instalment in our weekly ‘Everything you need to know…’ series we examine a wide range of features of life protection plans.

 

Maintaining cover if the client is ill

Life happens. If an accident or illness means clients have less money coming in than usual, it may be tempting to miss the odd premium with the intention of paying it later, when their finances improve. While most insurers tend to allow a 30-day ‘grace period’ for people to catch up on a missed payment, life cover will end if premiums are not paid over a longer period and the oh-so-important cover will be lost. Restarting cover later is going to cost more because the client is older and will be subject to re-underwriting. Insurers recognise this and offer clients support to maintain their cover in times of financial difficulty though the wavier of premium benefit, which in itself has a wide range of options on how it can be set up.

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But what if the illness is life limiting

Being told you have just months to live must be a desperate time. Not only does someone need to wrestle with their own emotions, they will also see and suffer the impact of their situation on their loved ones. At difficult times like these, clients may want to get their financial affairs organised to be be as comfortable as possible in their last days. Being able to claim on a life policy in such scenarios can make a massive difference. Thankfully, all insurers include terminal illness as standard within Term Assurance contracts.

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Getting cover in place before the plan is in force

When a client makes that decision to commit to buying protection, like any buying decision we make, they’re likely to want the cover in place as quickly as possible. Often, and especially in recent times, obtaining medical evidence, can be a painful and time consuming process. In these difficult circumstances insurers are providing more agile and creative solutions, and the services like iPipeline’s XRAE, LifeQuote and Underwrite Me can streamline the journey, but nevertheless getting cover in place quickly will always be the client’s priority. Insurers do recognise this and offer periods of ‘free cover’ during underwriting and during property purchase.

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Increasing cover when circumstances change

Nothing stands still for long and life changes. That’s why is so important to regularly review your clients protection needs. When certain life events happen many insurers allow clients to increase their cover with no further underwriting, meaning cover can be adjusted quickly and any changes in medical conditions need not be disclosed. This is extremelyuseful in helping clients maintain cover that matches their changing needs, but again there are differences in how this works across providers.

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How plans can adapt post-claim

Joint life plans are very common but they have a severe limitation in that once one life has unfortunately died, the survivor is left without valuable cover, which can be costly and time consuming to reinstate. Some providers offer a ‘joint life buyback’ option which enables the surviving life assured to buy back their life cover after the death of the other life assured without further underwriting. A huge relief and comfort at a difficult time but there is some variation in how this works across providers.

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Offering cover to older clients

Putting protection in place for younger clients, perhaps as they start building a family or buying their first home will, in most cases be relatively straightforward. They represent little risk to insurers and premiums are cheap. But what about at the other end of the age range? Setting up cover for older clients will bring more factors into the thought process, including the maximum age allowed when the plan starts and the age to which cover can be offered.

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Watch out for future “Everything you need to know” pieces where each week we will cover a different topic and provide you with the information you need to know to discuss the topics with your clients.