This was going to be a nice one to write. December's blog. It's been a decent year. Pension term has been a big success. Loads more advisers getting onto the benefits tele-underwriting can bring to them.
Cue some scary thoughts on the Law Commission’s suggestion of non-contestability periods from the excellent RGA workshop on the American protection market. The USA has non-contestability clauses in their legislation – always have had. The result – that practically every claim is paid – even if the client DID fraudulently commit non-disclosure, is something we all need to consider.
Maximum benefits available without medical underwriting would fall considerably. In fact maximum benefits in general would fall – even with underwriting. Oh and underwriting questions and processes could get even longer, and longer, and (that’s enough emphasis on ‘longer’ – Ed).
In fact instead of getting rid of GP reports, we’d have a model where the vast majority of cases applied for would go for one as a general rule of the process.
Perry from RGA made a good point though to counter the argument. “We haven’t done enough as an industry to do away with non-disclosure, so if that continues we will be made to.” That isn’t right he argued. And he’s right. We talk a good game but change little. It’s only a question of time before we are made to change by legislators fed up with all talk and no action.
Last week was spent running round London seeing the media on the subject of online and tele-underwriting. We’d just issued our response to the ABI as part of their industry consultation on this area and want the minimum standards to be raised here. It was going well. Too well in fact. Cue the chancellor’s pre-budget report.
When he announced his review of tax relief on pension term assurance premiums it caused chaos in the industry. Thousands of customers applying for cover have been affected. By now most advisers are hopefully starting to get their heads around the various stances from providers on what to do with pipeline pension term applications. I wish them luck.
When the PTA pipeline issues are out of the way – which for some adviser firms will be the other side of Christmas, attention will turn to lobbying our views to the Treasury - or HMRC as it has now become known. There are two people responsible for the HMRC review of pension term assurance. They are Stephen Webb and Martyn Rounding.
So take a few days to consider your views, get rid of the emotions that last week caused, and then tell them about the impact of this review on your business, but more importantly, your customers.
Tell them that customers who bought PTA cover from 6th April 2006 should be allowed to keep their life cover with tax relief.
Tell them that PTA was helping low earners to be able to afford life cover and we should not use it as an incentive to get people buying pensions. But tell them these things carefully, in fact put it in writing, because the last time we told HMRC things about the then future PTA market place they were creating, they either ignored us or refused to listen.
That’s not treating customers fairly in my book. I can guess what you think. Have a great Christmas anyway…IFAonline
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