Planning the route for gender-neutral policies
Advisers who want gender-specific prices for clients have to place the policies by midnight on 20 December.
It is less than 100 days before the world’s greatest sporting spectacle takes place in London. Excitement is building and the next milestone will be when the Olympic torch reaches our shores on the 19 May at Land’s End. The route has been meticulously planned to come within 10 miles of 95 per cent of the population with more than 8000 torch bearers, we are told. That is some planning.
The forthcoming gender-neutral pricing requirements are slightly less high profile but no less demanding in terms of planning. The clock is ticking and if you want gender-specific prices for your clients, the policy has to be placed on risk by midnight on 20 December.
The logistical and security arrangements for the torch route have taken a great deal of planning, but at least the details have been known. With financial services, the devil is always in the detail. Guidance on gender-neutral pricing has taken some time to come through and several key details have been left open to interpretation.
So how does this help the intermediary in planning what to do for the rest of this year for both the existing client base as well as any new potential clients?
Looking at your existing client portfolio first, this is an ideal opportunity to assess any unmet protection needs. An immediate opportunity is to contact clients who, for whatever reason, did not take out protection coverage when they completed their mortgages.
While it could be argued as to how these clients slipped through the net, what is clear it that given the uncertainly relating to how prices will finally even out, this is a great opportunity to bring to the client’s attention that it is likely that some prices will increase at the end of the year.
Staying with the existing client portfolio for a minute, the change to gender-neutral pricing is an important factor if a client thinks about lapsing a policy. Often the first that is known about this is when the direct debit mandate fails. We all galvanise into action in order to explain all the benefits that would be lost to the customer should they continue with that course of action. However we now have the added argument that if the client does lapse the policy, then potentially the cost will increase for the same coverage due to the changes.
Turning to new business, there are many opportunities. By segmenting your marketing, you will be able to see first hand what the opportunities are. An example would be income protection especially for male lives. We know that as a consequence of the gender-neutral pricing requirement, male rates are likely to increase. Now is the time for income protection. If you come across instances where your client cannot afford full cover to retirement, look at policies that have a limited payment period but allow the customer under certain circumstances to convert to full cover at a later date. By doing this you are locking in the gender-specific rates for your clients.