Screaming from the rooftops about protection

Imagine leaving your family lumbered with a whopping mortgage if the worst happens – statistically unlikely as this seems.

I can only think that the reason so many people shun these plans is that they do not realise how cheap they actually are.

Great strides have been made in this area in recent years, and that is not something you can often say about insurers.

Cover has been widened, definitions of terms and conditions simplified, and more emphasis placed on making policies work in the way consumers expect them to.

It is a huge improvement. As little as two years ago, I was routinely receiving letters from people whose loved ones had been struck down by an illness or disease only to find the insurance plan they had loyally paid in to would not pay out.

It is devastating. Fights ensued and, generally, the insurer ended up paying up often because they had been caught out by one of their own exclusions which had not been explained well enough.

The latest figures from the Association of British Insurers have showed that 97 per cent of all protection claims were paid last year, and a whopping 98.4 per cent of all term assurance.

It must be wonderfully reassuring for those families who have sadly had to make a claim to get these payouts.

IFAs should be screaming from the rooftops about the benefits of protection policies. They are cheap and oh-so important.

IFAs should be screaming from the rooftops about the benefits of protection policies

The work insurers have put in to improving the understanding of these plans has also made them much simpler to understand.

For the insurance industry it should be a lesson learned and one they can now apply to pensions.

In this field terms are still too mystifying. You and I may know what spouse benefits, inflation proofing, guarantees and fixed term annuities are, but I am sure as anything that Mr and Mrs Retiree from Kings Lynn do not.

It should not be taken for granted just how dazzlingly complex and jargon-filled the world of financial services is.

Few can ever really be certain what they are buying.

It is one of the problems I have got with structured products. Find me an adviser or salesman that can explain how returns are generated in a way that a 65-year-old retired bricklayer from Bournemouth can understand and maybe then I will be convinced they are appropriate.

If insurers can press ahead with simplifying pensions as they have done for protection plans, then maybe consumers stand a chance of signing up to products that they actually think are good value.

Property funds: Too much, too late

Have we got another classic case of retail investors pouring in to a fund just as the market may be about to take a turn?

While Isa investment sales were generally down year-on-year in May, a whopping £491m poured in to property funds.

Few think that property prices are due a plunge, and certainly there seems plenty of scope for commercial properties to gain greater yields, but there are legitimate concerns that the economic recovery may be about to stall, that share prices may be overvalued, and that house prices may be about to have a correction.

Certainly I am incredibly cautious of commercial property, but that is largely because memories are still raw of the way firms barred redemptions in 2008. It is such an illiquid asset – a concept most novice investors simply do not understand.

Commercial property is about 30 per cent below peak prices in 2008, and yields are decent and at 11 per cent for some of the bigger funds, growth is decent too.

But it is the liquidity that makes me nervous. And given most Brits’ exposure to property in the form of their own home, this mini-boom is enough to set me on edge.

Hold off on getting advice just now

Anyone who wants pensions or investment advice for the rest of the July might have to put their plans on hold.

You see, it is the Tour de France, and from the small-ish sample of financial advisers I follow on Twitter, almost every one seems to be a avid cyclist.

Where once all talk was of annuity reform, guidance guarantees and risk ratings, now all you see is 140 character long discussions about bike frames, training plans and hill climbs. No other work can surely be being done.

James Coney is editor of Money Mail at the Daily Mail