The report also said providers should do more to appeal to those who would use a critical illness payout to pay for medical care rather than rely on an NHS under extreme pressure.
Of course, the report was focused purely on critical illness cover, but the issues raised by CIExpert apply across the financial protection insurance spectrum. The products are not well known and consumers do not really understand them.
Game of chance
I am not sure what the answer is. Maybe it is a financial education issue, but I think it is wider than that. Protection insurance is not sexy like investing, which appeals to consumers’ greed. It is also a game of chance — the majority of customers have no need to claim and come to the end of their policy’s term a little aggrieved that they have poured quite a lot of money into the coffers of the provider they are with, and got nought back.
It is why I think the policy extras that are increasingly a feature of new protection products should be developed further, helping to give the insurance a value beyond when it meets a claim.
The government could have done its bit in the Budget by cutting insurance premium tax, but it chose to leave it alone.
No surprises there. A shame, because at the end of the day a buoyant financial protection market is not only good for consumers, advisers and insurers, it is good for the country.
Jeff Prestridge is group wealth and personal finance editor at DMGT
