What features are available on life insurance – Everything you need to know
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
Insuring an insurance payment sounds odd but paying a bit extra for the feature that does this – a waiver of premium benefit – on top of the usual life insurance premium can be useful. It ensures that if clients have to stop work due to an accident or illness, their premiums will be paid by the insurer for a specific period, helping to maintain their valuable cover. In this article we look at what insurers are offering in terms of waiver of premium benefit on life insurance and how they differ.
But what if the illness is life limiting
When someone receives the devastating news that they do not have long to live, their emotional responses will vary.
However a client deals with their terminal illness, the financial facts of life will probably not be uppermost in their thoughts as they make sense of what is happening to them and decide what to do in the time they have left. Anything that insurers can do to make the financial side of things less stressful will help advisers look after these clients during the difficult times ahead.
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
For older clients the age limits that insurers put on their policies may restrict the advisers’ choice. With many mortgages running to later ages and people often needing to work into later life, many older clients will need proper protection in place, and for longer. It is important to understand which insurers welcome applications from older clients and the maximum age at which policies will expire
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.
