Protection  

New policies should replace reviewable CI: Ward

The managing director of PayingTooMuch.com and member of London-based Lifesearch’s recent best practice panel for insurance said that advisers and providers should favour policies with a set, guaranteed premium level.

Speaking at a seminar at the Royal College of Physicians in London, Mr Ward said it was no longer fair to increase the monthly cost of premiums, especially when medical advances mean that providers can better manage their liabilities.

He said: “Reviewable pricing was introduced at a time when AIDS was relatively new to society and insurers needed to ensure their liabilities could be managed.

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“Since then reviewable pricing has run alongside policies with a guaranteed premium for the lifetime of a policy, with the latter obviously being more expensive for the consumer as they had certainty.

“However, with medical advancement, the risks for insurers have reduced significantly and the gap between pricing of reviewable and guaranteed policies has over time narrowed substantially.”

He said that customers would not choose reviewable policies over guaranteed-priced policies, because these are “better and clearer for customers”.

Mr Ward added: “By removing policies with reviewable premiums, the number of options available would be halved, making it easier to see the wood from the trees when it comes to making a selection.”

ADVISER COMMENT

Roy Durrant, chartered financial planner for Norwich-based Almary Green, said:

“Going back 10 or 15 years you could have reviewable or guaranteed premiums; this option is available now. You have to consider each case on its own merits.

“Regardless of the type of policy, you do need to look at the individual policies, reviewable or guaranteed. For example, what an old policy cites as definitions of cancer may differ significantly from a more modern policy. Certain ratings of the seriousness of cancer will have changed or will be more specific. Therefore it is not as easy as simply stating that reviewables are ‘old’ policies.

“Also it may be more of an affordable option for some people to have reviewable policies now, as their income or salary may increase in the future.”