I don't think too many people are unaware of the sudden u-turn by the government regarding tax relief on life cover. Nor can most people be unaware of the lengths the industry went to discuss our intentions with both HM Revenue and Customs (HMRC) and the FSA once the implications of pensions simplification were understood.
It’s worrying that the one thing which has breathed new life into life cover sales has been whipped away with so little thought. But this just demonstrates the lack of joined-up thinking in the government, who prefer to talk about pensions or savings.
Those of us who work in the industry, despite our individual specialities, tend to suggest a broader view of financial planning that isn’t simply limited to just somebody’s pension, personal savings or personal protection cover. We know that quite often without the third one being in place, people are not in a position to fund the first two, yet time and again we see a government body discussing the importance pensions or investment, but rarely do we hear them advocating the need to have protection.
So now we have consumer detriment, not only from the loss of tax relief on the premiums, but it could also stifle future product design.
Although protection isn’t a tangible product, just like any manufacturer we have to research the market, ensure we meet the legislation and standards and provide educational tools to help people understand the benefits and risks of the product and when it is an appropriate sale.
All of this comes at an increasing cost as regulation grows and evolves - a cost we can’t, in this case, recoup through future sales.
I’ll leave you with some words from a rather more famous politician that you may be familiar with:
"If I had my way I would write the word ‘insure’ over every door of every cottage and upon the blotting book of every public man, because I am convinced that, for sacrifices that are inconceivably small, families can be secured against catastrophes which otherwise would smash them forever."
Obviously we’ll never know whether Sir Winston Churchill would have approved of tax relief on premiums or not.
Ian Jefferies is head of protection marketing at Friends Provident.
The views expressed are those of the author and not those of the company he represents.IFAonline
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