Speaking about a client who had cancer and took a policy with an exclusion for the cancer and a 50% rating, he said: “After a number of years, I decided to review the policy and after asking discreetly if he was in good health I looked for alternative cover.
“He was offered a new policy at normal value and with cover with no exclusion. I was able to cut his premium, and he was now covered for cancer too.
“A lot of advisers may not think to revisit these cases. Two years later his cancer returned to his other testicle and he underwent orchiectomy and was paid £91,000, which cleared his mortgage.”
2) Consider family income benefit instead of term assurance
For clients who are looking to provide financial security for their family but are put off by the cost of a big lump sum, one option could be to use family income benefit instead.
Instead of the lump-sum pay out, these little used plans offer a tax-free payment every month for the remaining life of the policy.
Benefits of these plans include the fact they remove the need to make a decision of how to use and invest a big lump sum payment, although this may be less of a problem for people with a good financial adviser.
Cover is less expensive because payments stop at the end of the term of the policy, so if the client dies 21 years into a policy taken out over 25 years, any payments would be made for four years. However, in twenty one years’ time, the family may not need anywhere near the original level of cover.
3) Consider short-term income protection (or ASU)
Long-term income protection is a great product and I’m often the first to sing its praises.
However, if the cost of a full income protection policy is too high for clients, one way of bringing the cost down to a more manageable level would be to opt for a short-term income protection policy or an accident, sickness or unemployment policy (ASU).
A full income protection plan will cover a set percentage of the insured’s income until they are well enough to return to work, or through to retirement if they never recover enough. A short-term policy will limit the payout to a set timeframe, typically 12 months, or potentially up to five years.
Ian Sawyer, managing director of Assured Futures, agrees: “ASU or short-term income protection policies are great products that can be tailored to fit a client’s needs.
