A recent poll by The Protection Review showed that 62% of advisers have concerns about the emerging execution only protection market where clients select and buy their own life insurance on line. The availability of online policies is intended to make the protection market more accessible, allowing individuals to buy policies without advice and help bridge the frequently talked about ‘protection gap’. However, with growing complexity of policies together with underwriting restrictions, there is concern that policies may not provide intended cover at the point of claim.
For life only policies it can be argued that there is a place for this self service route. However, if there are any medical disclosures or underwriting complications, a specialist adviser can ensure that the correct cover is put in place so that the policy is appropriate for purpose.
More complex policies like income protection and critical illness pose far greater challenges when it comes to a self serve route. For critical illness, for example, there are variations in definitions used by the different providers with some offering partial payouts for certain conditions. An adviser has this knowledge at their fingertips and can help individuals tailor a package of protection to suit their personal budget and circumstances.
A common justification for the self serve approach is that clients may not want to pay for advice, preferring to use what they can afford to buy cover. This may, however, be a false economy if they end up with the wrong policies to meet their needs. Some brokers, including London & Country, offer the best of both worlds providing fee-free whole of market protection advice.
It is no surprise that the majority of advisers think it is better for individuals to have protection advice; after all providing advice is their livelihood. However, understanding the complexities of the protection market and the devastating consequences if the wrong cover is in place, there is undoubtedly a very real customer need for good quality protection advice to sit alongside online self service options.