Whole of life cover a good alternative to term assurance

Phil Jeynes is Head of Account Development at PruProtect

Sometimes in this industry the statistics seem out of kilter with the real world.  Having recently revamped and repriced our Whole of Life proposition, one such anomaly jumped out to me.

Whole of Life cover accounts for only around 2% of UK protection sales at present, with term based cover by far the dominant product choice.

The reason this seems so strange is that everything we know about the changing world we live in tells us that the opposite should be true. We are living longer, more people are carrying debt into retirement, less people are provisioning sufficiently for later life and people’s retirement ages are moving back.

Given all of this one would assume that, given the choice, clients would prefer to take cover which guarantees to pay out in the event or serious illness or death regardless of their age, as opposed to cover which ceases arbitrarily at, say, age 65.

In fact of the tiny amount of Whole of Life cover sold in the UK, the vast majority of plans are simple “Guaranteed Over 50” type products which offer a relatively low sum assured with no underwriting needed – a great product in its own right but not appropriate for debt repayment, provision for a spouse or inheritance tax planning for example.

So why are advisers not selling Whole of Life? Possibly because price wars on term assurance have seen the gap in cost between it and WOL grow wider, maybe also because some advisers believe that they do not have the correct FSA permissions to sell WOL. Just as likely is that the product is simply not fully understood and therefore habits have formed around term sales.

Next time you run some quotes for term assurance, take a minute to compare the cost of a WOL plan and you may be surprised. Even adding a small component of WOL cover to a standard term plan could be great news for your client and provide the basis of a well rounded recommendation.