IFAs have been urged to encourage their clients to take up more critical illness cover and tax effic...
IFAs have been urged to encourage their clients to take up more critical illness cover and tax efficient investing in today's technical sessions of the LIA's 30th anniversary conference in London.
Critical illness premiums are set to start rocketing due to the effects on the insurance industry of last year's terrorist attacks in the US.
And the ABI is about to adopt new language on the definitions of cancers and heart attacks that could push premiums up for clients in their mid-40s and older.
Nick Kirwan, chairman of the ABI CI working party and head of marketing and product development at Scottish Provident said the CI market had exploded in the past 12 months as IFAs looked to boost earnings in a world constrained by Stakeholder and the 1% rule.
But IFAs also needed to do more to impress their clients with the need for cover.
"I want the industry to be in a position in 10 years time when people will be able to say: 'I know someone who has had a CI payout.'"
Individual CI cover providers needed to do more to minimise the number of future claims rejected, otherwise the whole insurance industry would be tarred with the same brush, Kirwan warned.
Nearly 40% of UK homeowners, or 4 million people, still do not have CI cover, according to a MORI poll result presented at the conference.
Earlier, Brian Lawless, Axa senior tax consultant, called for better use of tax efficient investing.
Calling taper relief a "rip-off", Lawless said IFAs should "secure your (sic) tax base then start from there" when developing investment strategies for clients.
"I don't think people should invest in the stock market - it's not very tax friendly," he said, adding that setting up a portfolio of stocks was "hopeless" from a taxation point of view.
Investors should instead consider bonds and means of deferring tax payments, which would enable more efficient encashment of assets, for example, when nearing retirement.
The problem for IFAs was that asset management and tax management were "diametrically opposed".
However, the argument in favour of tax management was that over a longer term period an investor with a secured tax base could make the same net gains without needing to take on the same level of risk.
Even unit trust managers were guilty of not paying enough heed to the tax efficiencies of the assets under their control.
Delegates also heard how many self-employed people were likely to go limited in the next couple of years in order to take advantage of better tax breaks.
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