Category: Insurance

National Protection Sales Manager Bernie Buron highlights the potential business protection gap that might arise from the upcoming tax changes.

The UK government has announced that as of April 2017 the tax relief landlords were enjoying on their mortgage payments would be phased out over the following years. With the stamp duty changes also coming into effect in April 2016, there has been an expected increase in limited company applications in the buy-to-let sector, as many are looking at their current situation and deciding that applying for mortgages as a business is a preferable option.

This has opened up a world of opportunity for advisers as their landlord clients find themselves facing a different set of business protection needs that can not only protect them and their employees from financial detriment, but make their portfolio as tax efficient as possible.

Limited companies receive tax relief on premiums that they pay for business protection. With your advice, they can ensure their move to a limited company set-up can benefit them whilst ensuring a stable and secure financial future for themselves and their employers.

Although there are different types of business protection, there is one main area that is likely to be pertinent to your landlord clients:

Relevant Life Cover

A tax efficient death in service contract paid to the employer but written under trust for the beneficiaries of the plan.

• Covers individuals such as employees or directors of a business
• Applies to limited companies, sole traders or LLPs
• Premiums can be treated as a business expense and claimed against corporation tax and/or income if sole trader
• Maximum value can be gained from placing it in trust
• Aviva have recently added Critical Illness to their relevant life cover

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

In a mortgage industry that seems to change as much as the weather in the UK, we have compiled a short list of key financial dates worth noting for you and your client. From scheduled tax changes and the ending of housing schemes to annual speeches and financial events, these important dates will keep you and your clients ahead of the game in 2016.

16 March 2016: Budget Speech

One of the most important events in the industry calendar will be Chancellor George Osborne’s annual Budget speech. After a cautious pre-election budget in 2015, some experts are preparing themselves for more change as the government tackles the housing crisis head on.

Anticipated announcements are on pension taxation and changes to tax relief, possibly moving from a tiered system to a flat rate. But whether more changes are on the way remain to be seen.

21 March 2016: European Mortgage Credit Directive

One of the biggest, yet scarcely mentioned financial changes in 2016 will be the MCD, or European Mortgage Credit Directive. This will come into play in March, introducing an EU-wide framework of conduct rules for all mortgage firms.

Designed to further protect consumers and create a sole European market, our rules will be set by the UK’s Financial Conduct Authority (FCA). The biggest effect this is likely to have on the industry is on buy-to-let mortgages, foreign currency loans and the introduction of a European Standardised Information Sheet (ESIS).

1 April 2016: Stamp Duty BTL

Changes in Stamp Duty Land Tax (SDLT) come into effect on 1 April 2016. This will mean higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes.

Although designed to disincentivise the financial investment in UK property and increase supply for first-time buyers, some experts have questioned the tax increases and feel landlords are being unfairly targeted. Either way, the rush to complete applications has already started in order to avoid the increase in April.

25 November 2016: Autumn Statement

It may not get the same attention as the annual budget speech, but the government’s autumn statement has historically contained some surprising financial announcements, such as changes to stamp duty in 2014 and changes to tax rates last year.

December 2016: End of Help to Buy 2

December will see the end of the government’s Help to Buy: Mortgage Guarantee Scheme. Otherwise known as Help to Buy 2, it has helped many first-time buyers with only a small deposit onto the property ladder.

Unlike the Help to Buy: Equity Loan, which only covers new-build properties, Help to Buy 2 can be used for both new build and existing homes. The scheme is now being withdrawn as lenders bridge the gap, with many now offering mortgages on deposits of 5% without the assistance of government schemes.

TBC: A Base Rate Rise?

The possibility of a Bank of England Base Rate Rise has been the subject of financial speculation for several years now, ever since it was set to its lowest-ever level of 0.5% in 2009. Although many experts suggest that Mark Carney will announce a move on interest rates in late 2016, there are some that still say this will not happen until 2017.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

Head of Mortgages and Insurance Stephanie Charman highlights the value of unpaid work and how protecting your clients could extend beyond just the breadwinner.

It is easy to assume that financial cover is only needed for those in employment, to ensure loved ones are protected if they are unable to work. But provider Legal and General have challenged that assumption and calculated the ‘value of a parent’, revealing that protection is very much needed for unpaid work parents do at home as well.

This raises the possibility to discuss protecting the non-breadwinner of the household with your clients. After all, if they were unable to do the important unpaid work they do due to long term illness or even death, the breadwinner will most likely need to take time off or pay to cover the necessary chores and look after children.

The real cost of parenting

In a 2015 report, Legal and General found that most people underestimate the value of the unpaid work that they do. When asked to calculate the overall cost of raising a child to the age of 18, parents on average estimated the cost to be £123,365, when in fact it is as much as £184,392. This breaks down to £10,244 a year, or £197 a week. Most people underestimate the sheer number of hours they spend on unpaid work such as chores and childcare.

The value of Mum and Dad

To put things into perspective, Legal and General also calculated the annual salary that the unpaid work equates to for parents in the UK. On average, a mum’s value is £29,535 a year, with the value of a dad coming to £21,601. When asked to estimate this figure, people perceived the “salary” to be £16,796 for mums and £16,120 for dads, some way shy of the actual cost.

Potential client scenarios

Has your client considered what would happen if the non-breadwinner of the household was unable to do the unpaid work? If a couple were to prioritise the breadwinner’s protection, how would they cope if either of them were unable to do the unpaid work for an extended period?

These scenarios are very much worth considering with clients when talking about protection, such as critical illness cover and life insurance. Solutions such as Legal and General’s Family and Personal Income Plan (FPIP) pays out a monthly benefit to deliver the financial support if a policyholder is unable to do any kind of work due to illness or death, whether paid or unpaid.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

Head of Mortgages and Insurance Stephanie Charman takes a look at how policy options such as ‘Vitality Optimiser‘ could change the way clients engage with protection in 2016 using new trends such as wearable technology. Steph also suggests how both appointed representatives and directly authorised advisers could benefit from the added-value and direct consumer interaction protection providers offer their clients.

When it comes to protection, I believe saving your client money whilst increasing the value of their policy could be the key to sales in 2016. But with obesity and other health issues on the increase, your client’s BMI or general health could affect the cost of the policy, leading to loaded premiums and possible affordability concerns.

That’s why saving clients money when buying the policy and then encouraging them to stay healthy during the term itself could also be crucial to protection sales over the next year. I think that one of the providers currently making their mark in this respect is Vitality, especially in combination with Vitality Optimiser: their flagship policy option that rewards consumers for actively engaging with their protection cover.

Staying fit and saving money

Did your clients receive any wearable technology under the tree this Christmas? If they did, they could be taking advantage of the latest benefits offered by policy options such as Vitality Optimiser. By offering rewards and even discounts to consumers if they stay fit and healthy and improve their “Vitality Status”, consumers can now actively engage with their policy, taking control of their own health-tracking using a points system. Reward can be a big incentive for clients, as they look to increase their “Vitality points” and monitor their healthy lifestyle every year.

Globally, wearable technology sales are expected to rise from 17 million in 2013 to 187 million by 2020. Sales are also on the increase in the UK, as we catch up with the engagement of the new trend in the US and China. I think it is inevitable then that more providers will embrace this consumer-focused market that helps clients directly reduce their premiums and increase their health, a win-win situation for provider, consumer and adviser alike.

Increasing client engagement can optimise sales

I understand that income protection faces possibly the strongest customer objections, despite being a vital cover for consumers. Protecting your client’s income is very real, but income protection accounts for less than 1 in 10 protection sales.

Tackling assumptions about state and employer support, as well as the surprisingly affordable cost of income protection, can often be the best start to the conversation. To help you even further, Vitality are offering an additional 5% discount on premiums on income protection policies with Vitality Optimiser, up until 29 January 2016. This means that consumers now have the potential to receive up to a 30% discount with Vitality Optimiser.

I believe that with the upfront discounts offered and the activity-tracking encouraging constant engagement with the brand, advisers will find that clients are also more likely to renew their plan, increasing your sales further.

If you want to find out more, there is a sales aid available to help you explain exactly how Optimiser works with your clients. Alternatively, call our National Protection Sales Manager Bernie Buron on 07764856553 to talk about how you can increase your sales in 2016.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

National Protection Sales Manager at Mortgage Intelligence Bernie Buron picks five policy options and benefits that appointed representative and directly authorised advisers can use to offer their clients that little bit extra on their protection policy.

In an unprotected nation, providers are working hard to deliver benefits and extras as part of their policies, to not just reward via discounts and premium reductions, but in some cases incentivise consumers to live a healthier lifestyle. I have picked five policy extras in 2015 that really add value to protection and can help you encourage clients to fully embrace their protection needs:

Friends Life Global Treatment

One of the more unique and bold policy extras, Friends Life Global Treatment sees the provider teaming up with Best Doctors, offering policyholders the chance to access the best diagnosis, advice and treatment in the world. As an additional option on any Protect+ cover, your client or their children can have access to “top medical minds and leading overseas treatment”, if diagnosed with one of many serious illnesses.

Aviva provides access to Grief Encounter

A great example of protection extending beyond simply financial cover, children of anyone covered by an Aviva life insurance policy will receive access to Grief Encounter. This support service helps bereaved children affected by the death of a parent or loved one, deal with emotional issues such as grief, fear and confusion.

Bright Grey’s Helping Hand

Bright Grey believes that to stand out from the crowd, a provider needs value-added benefits at its heart. That’s why they have included Helping Hand to all their menu and relevant life plans. This comprehensive package of third party suppliers (such as oncology nurses, speech and language therapists, bereavement counsellors and physiotherapists), is designed to deliver practical and emotional support exactly when your client needs it.

Vitality Optimiser

An optional extra available to add to all protection plans, Vitality Optimiser offers policyholders rewards and discounts that can, in some cases, reduce their premiums through living a healthier lifestyle. Policyholders can enjoy upfront premium discounts, which drop even further if they actively improve their health over the policy term. This is not including the other discounts and rewards on gym memberships, cinema tickets and travel.

Free Children’s Critical Illness cover with Legal and General

If your client gets critical illness cover with their life insurance policy, then Legal and General will automatically include children’s critical illness cover. Although not unique among providers, Legal and General will also include Child Accident Hospitalisation Benefits, Child Funeral Benefit, Childcare Benefit and Family Accommodation Benefit as part of the cover, making it a comprehensive offering.

If you are interested in joining our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446, option 1.

Sharon Mawby, head of sales and marketing at Mortgage Intelligence network, takes a look at why technology will be a big focus for appointed representatives and directly authorised advisers over the next 12 months.

A recent poll has revealed that over half of mortgage and insurance advisers feel technology is “extremely important” in today’s market, whilst only 3% felt it was “unimportant”. But in an ever-changing digital world, I feel it is also important not to underestimate the ability for consumer needs to alter quickly and to consider some of the technological challenges facing advisers in the next few years.

Fighting off the competition

Many experts see embracing technology as a big challenge for appointed representatives and directly authorised advisers in 2016, with preparation and flexibility key if financial planning starts turning to alternative platforms. As Head of Sales and Marketing for an AR network and DA Club, I recognise that right now advisers are as busy as ever. But if the tide turns and competition with direct to lender and comparison sites increases, it is a good idea to be ready for the needs of the next generation.

Although client retention and referral is still the engine that drives adviser-introduced business, making your name heard in today’s online market is a constant challenge. It is very common for consumers to “virtually” approach advisers through the internet first, to get a taste of who they are and what they do, even when recommended by a friend or family member.

Securing an online presence

A professional-looking and easy to use website is a powerful tool to attract business, with more consumers approaching companies online first. Many advisers are adapting to changes in consumer habits, investing in user-friendly sites that also deliver alternative forms of contact and communication, such as online forms and FAQs. Using technology and software to ensure good customer management and effective segmentation is key, to help advertise to and contact the right people efficiently, allowing you to spend more time with clients.

Social media is still very much a subjective consideration, especially in terms of return on investment and reputation management. According to research, although two-thirds of advisers regularly use social media, only half use it for business purposes. But embracing formal social media platforms such as LinkedIn is becoming very popular, and more advisers are finding not only new business, but important networking and referral opportunities appearing. If you are thinking of taking the plunge into the world of social media for you business, it is important to plan ahead and ensure that you know exactly what and who your target audience is.

Preparing for a possible future?

No-one can exactly predict the future, especially when it comes to changing technology. But there are many experts that feel the move to “robo-advice” is an area that many advisers should now be considering. Recent regulatory changes, such as the Financial Advice Market Review, has seen lender and adviser innovation opening up the opportunity for consumers to get their financial advice virtually and online.

Although general surveys suggest consumers still opt for face to face advice for big financial decisions, times can change quickly. Leading lenders such as Nationwide are expanding remote mortgage advice to hundreds of branches and several advisers are also beginning to offer virtual appointments for their clients. As the consumer demographic becomes more tech-savvy, they will in turn most likely become more comfortable with online advice, which means advisers with the most flexible and customer-focussed approach will continue to succeed.

If you are interested in joining our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446, option 1.

Sally Laker looks at how insurers’ recent hard work could be undone if they pass on the Chancellor’s premium tax increase to consumers.

Chancellor George Osborne announced in his summer Budget that, from November, insurance premium tax would increase from 6 per cent to 9.5 per cent. This is a rise of almost two-thirds: a jump that has received a mixed response from industry experts.

Osborne justified the change by highlighting a recent fall in insurance premiums, with the cost of contents insurance alone falling by 8 per cent since 2014. He said that, despite the increase, Britain’s insurance premium tax “is well below tax rates in many other countries”. He assured us the Government would continue to make insurance better value for consumers, claiming the recent fall in the cost of contents cover was due to previous alterations.

The Treasury has suggested that, by 2021, ministers will have accrued more than £8bn from the tax changes. However, by far the biggest concern is that, although insurers pay the tax, the extra cost will be passed on to the consumer. The Association of British Insurers calculates the new rate will add £9.48 to the average annual household insurance policy.

Osborne has confirmed that the increase will be added only to general insurance products, which account for just a fifth of all premiums. However, it is this fifth that needs to be encouraged wherever possible. I am concerned the important cover that consumers need will be further pushed out of reach due to price, and the public will be tempted into not protecting themselves at all.

This change has come at a time when cheaper premiums and more comprehensive value from insurers had started to re-energise the industry. At Mortgage Intelligence, we feel this hard work could all be undone if insurers end up passing on the increase to consumers. UK insurance premium tax may still be relatively low but, with so many under-insured, the need to incentivise remains high.

If you would like to join our award-winning Mortgage Network as an appointed representative or become a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.

Head of Mortgages and Insurance Stephanie Charman investigates whether the increasing number of covered conditions has made the critical illness industry too complicated for consumers and advisers alike.

When Critical Illness (CI) cover first arrived in the UK in the 1980s, it was a concise concept that originally covered just four conditions. We have now come a long way in ensuring that as many conditions as possible are covered, which is for the most part a positive thing for consumers. But has it now had a detrimental effect on the industry, over-complicating it for consumers and advisers alike?

Does Critical Illness needs reviewing?

Despite published claim statistics and the improvements to cover, CI sales in general have remained stagnant. As a result, the protection gap in the UK has also remained unchanged. This begs the question: has the continuing addition of conditions conversely dampened the attitude towards CI?

For a number of years, providers have been engaged in competition known as “condition counting”. This has been exacerbated by the general adviser preference to go with the policy that covers the most conditions, providing a perceived “value” to the protection. But this has led to a complex and confusing market for both advisers and consumers, as they struggle to understand and absorb information regarding the most obscure conditions.

However, experts suggest that we are reaching peak saturation of condition counting, and surely all a client is looking for is surety that providers will pay out when they need it most.

Ensuring clarity for consumers and advisers

Currently the five main conditions (cancer, heart attack, stroke, MS and Children’s Critical Illness) account for 88% of all Bright Grey’s claims, which highlights the importance of these central conditions. Munich Re’s Julie Scott suggests: “One simple answer could be for insurers to consider realigning the features of the product with its actual name and focus once more on the truly critical conditions that have a fundamental impact on consumers’ lives.” This would certainly help advisers to use relevant statistics to support their client conversations, such as the recent research regarding cancer survival rates in the UK.

Since MMR the onus on the intermediary has become even heavier and providers must ensure that the brokers benefit from protection change as much as the consumer. This means ensuring advisers have the means to effectively match consumer circumstance to policy options, so that consumer outcomes are effectively and consistently met. This will in turn result in more positive protection stories with substance, instead of simply publishing statistics that are read by few outside of the industry.

Creating a brighter future for Critical Illness

Providers need to simplify and expand at the same time. This may seem contradictory, but if expanding means offering more than just financial protection, then the simplifying can happen within policies. I wrote last month about Friends Life’s Global Treatment, which is the sort of outside-the-box thinking that is becoming vital as we move into an era where advanced treatment means more people are surviving disease and illness.

Some experts believe in a more radical approach to changing CI. But as long as the condition counting ends, definitions become more concise for consumers and providers continue to vary how cover is delivered, we will hopefully witness a shift in attitudes. Advisers are financial experts, not medical, which is why there is currently some timidity to enter a CI market saturated with complicated and esoteric criteria. To help you, we have a protection helpdesk of experts ready to assist in locating those tricky cases and deal with obscure conditions.

If you are interested in becoming an appointed representative of our award-winning Mortgage Network or a member of our Mortgage Club, contact the Broker Support Team today on 0845 130 7446 opt 1.

Head of Compliance Stephen Adams explains when and why advisers should talk to their clients about the benefits of placing a life policy into Trusts.

With so many protection challenges facing advisers today, we know how difficult it can be to find time to discuss every possible element of Life Assurance with your clients. But according to one leading provider, only about 10% of life policies are currently written in Trust, which suggests that in some cases consumers are not aware of the potential benefits.

In some situations a Trust is likely to be neither relevant nor advisable. However, there will be times when the best consumer outcome will point towards a Trust and clients must be aware of all the potential benefits or disadvantages relevant to their circumstances.

When should I talk about Trust to my client?

Essentially it will be down to the adviser to recommend what is in the best interest of the client. However, as a very general rule: Joint life policies are less likely to require Trusts , as are Single Life Policies where the client is married (but note this is dependent on the level of cover and the latest intestacy rules). But with a Single Life Policy where the client is not married, Trusts can play a very important part and should therefore necessitate a conversation with your client about writing their policy into Trust and ensuring the correct distribution of pay-out.

How can clients benefit from putting their policy into Trust?

Avoiding probate: A legal process which confirms an executor’s authority to deal with possessions. This lengthy process currently takes, on average, six weeks and for more complicated cases can be many months. Putting a policy into Trust will avoid this and any even lengthier connotations such as intestacy, which can be a stressful time for your client’s family and loved ones. If a Life Assurance plan is in trust, it is no longer part of the settlor’s estate so therefore probate is not required as the funds are paid directly to the trustees to distribute the funds.

Helping to reduce Inheritance Tax (IHT): By putting a policy into Trust, your client may avoid the policy being absorbed into the deceased’s estate and being liable for Inheritance Tax. The Government raised £3.3 billion in IHT revenue in 2013/2014 and admits that this number would be significantly reduced if more polices were written in Trust. Any assets left to a spouse or registered civil partner, provided they’re UK domiciled, are exempt from inheritance tax. But this can be often down to whether the policy is kept in Trust until its next 10th Anniversary.

A note from the Compliance Team…

It is important to remember that the above is a very general guide and specific thought needs to be given to each individual customer circumstances. Advice can also be sought from legal helpdesks of product providers. If in any doubt, then an adviser must guide the customer to seek legal advice and record this in the Reason Why Letter.

If you would like to join our award-winning Mortgage Network as an appointed representative or become a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.

Wearable technology is not tomorrow’s world, it’s today’s. The number of wearable devices shipped worldwide in the first quarter of 2015 hit 11.4 million, up by 200% from the previous year. Apple’s flagship watch is becoming especially popular in the UK, as the nation rushes to embrace an era where consumer analysis is king.

But whether actively or passively, these devices have been collecting consumer data for several years now. This has made many insurers take notice and begin to consider using big data to analyse the metrics on their customers, in the way that “black box” recording is having an impact on the car insurance industry.

The simple fact is that there are very few providers left that do not believe wearable technology is soon to have a significant impact on the industry, with many in the process of drawing up business strategies to incorporate these devices.

A win-win scenario

Reducing the risk of ill-health from a consumer’s perspective is always a good thing. Also, because it lowers the risk of claim for insurers, consumers are starting to benefit from reduced premiums and rewards for staying healthy.

Vitality is one of the providers in the UK leading the way in using this new technology as part of their offering. Their honest assessment of the situation: “It costs us less to look after you. So we can pass those savings back”, is the basis of a reward scheme to empower the consumer through logging counted steps, calories burned and attained heart rates.

Big Brother is watching you

Could insurers use registered data on consumers during the underwriting process, at the time of claim or at the point of sale? Sceptics might assume that this will also mean insurers could increase premiums if your data is negatively impacting health. But so far providers are choosing to engage with customers through encouragement and empowerment first, before risking negative media.

Not just the amount, but the accuracy of the data will also need to be carefully assessed, to ensure that there has been no black hat techniques used, such as physically manipulating the devices. These issues will no doubt become more complex and it is important that an honest and transparent approach is taken by both consumer and provider alike.

The beginning of a beautiful friendship

Could this be the beginning of a new, stronger relationship between consumers and providers? Providing consumers with free technologies to monitor fitness and health could help to open up a long-term interactive consumer engagement where rewards and discounts are on offer, especially those that lead towards a possible premium discount.

There is of course still some scepticism as to how much providers could and should utilise consumer data, but empowering consumers with the ability to have real-time engagement with their policies may just be the link that bridges the protection gap in the UK. One step at a time it seems needs to be taken from both consumer and provider, as wearable technology weaves it way into industry view.