Brokers could boost their protection sales by taking into account changes to bereavement allowance which could see clients lose nearly £90,000.
The Pensions Act will replace a number of benefits, including the Widowed Parent’s Allowance (WPA) with a single system of Bereavement Support Payment (BSP) from 6 April 2017.
But network Tenet has warned that this has huge implications for a surviving spouse going forwards, in terms of both the level of benefit and the payment term.
Gemma Harle, TenetLime managing director, said: “For many years, successive governments have been a very benevolent insurer by providing nearly £6,000 per year through the widowed parent’s allowances.
“This is all set to change in April however and advisers have an essential role to play in educating clients and ensuring that they have suitable protection in place.”
For example, over a 15 year period, the level of benefit a widowed parent could receive pre-6 April was £89,789. Post-6 April, that figure drops by a whopping 89% to a maximum payment that can be claimed of £9,800, which is based on a lump sum of £3,500 and £350 per month (non-taxable) for 18 months only.
In January Tenet launched a new range of protection support and tools to help ensure clients get the cover they need, which includes more specialist helpdesk support, a client-facing protection guide and other marketing support, and a more concise protection fact find and ‘demands and needs’ template.
Tenet also offers a referral service, where advisers can refer protection business to a dedicated specialist, retain ownership of the client and Tenet only advises the client on the areas of business specified.