Critical Illness Insurance Concerns For Cautious Customers



Critical Illness Insurance Concerns For Cautious Customers

Critical Illness Insurance .​
Concerns For Cautious Customers
The Financial Services Authority has recently carried out a​ review of​ the​ way in​ which information and advice is​ given to​ retail customers purchasing financial products .​
One of​ the​ products which they considered was the​ sale of​ Critical Illness Cover.
Critical Illness Cover is​ often taken out by people taking out a​ mortgage,​ usually as​ part of​ a​ term assurance policy .​
It may also be purchased as​ a​ stand-alone product .​
The policy will pay out a​ lump sum if​ the​ borrower becomes seriously ill with one of​ a​ list of​ specified illnesses,​ commonly cancer,​ heart conditions,​ stroke etc.; this will help with loss of​ earnings due to​ the​ illness and general life-style changes which may be the​ result of​ the​ illness.
Firms selling critical illness cover are required to​ comply with certain standards and although these are being met reasonably well,​ the​ survey showed that there could be some improvement in​ the​ way in​ which they could help the​ customer to​ gain a​ better understanding of​ the​ product.
The FSA have visited firms and employed mystery shoppers to​ look specifically at​ how compliancy is​ working out with regards to​ sales processes when selling critical illness cover.
Supervision visits were paid to​ 42 firms .​
Whilst in​ the​ main these were financial and mortgage advisers,​ they also included banks,​ building societies and insurers .​
The market research company,​ Research International,​ carried out 80 mystery shops to​ 51 firms in​ total,​ to​ report on​ what actually occurs.
Director of​ Retail Firms,​ Sarah Wilson,​ has said that whilst many of​ the​ findings were positive,​ a​ few problems had been identified .​
Initiatives have been launched in​ order to​ deal with them .​
The fair treatment of​ customers is​ of​ prime importance,​ especially with regard to​ making policy application forms and documents more easily understood .​
So far these changes seem to​ be helpful.
Critical illness cover is,​ however,​ complex and some of​ the​ problems cropped up in​ the​ context of​ the​ financial promotion of​ the​ schemes and general insurance documentation .​
Customers sometimes have difficulty in​ comprehending exactly what they are being sold .​
Therefore it​ is​ difficult for them to​ assess whether this is​ the​ correct cover for them,​ or​ whether a​ payment of​ income protection product would be more suitable.
The needs of​ the​ customer have to​ be taken into account and there should be a​ careful assessment of​ the​ type of​ protection which they need .​
However,​ where there were two or​ more types of​ policy,​ the​ cost was sometimes the​ only aspect taken into account when recommending the​ most suitable one .​
Other factors may have been left out of​ the​ equation,​ such as​ conditions covered or​ whether there were other products more suited to​ a​ particular client’s requirements.
Miss-selling is​ a​ risk,​ but most firms had taken reasonable measures to​ manage this .​
There were found to​ be good training programmes and risk based monitoring.
As is​ the​ case with prime mortgage payment products,​ customers have time to​ consider their options before they make the​ decision to​ purchase the​ cover.
The results of​ the​ survey offer some reassurance that the​ needs of​ the​ customer are being protected and any changes to​ be implemented can only offer change for the​ better.

Critical Illness Insurance Concerns For Cautious Customers





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