Sell as much level term insurance as you can before tax changes
Fidelity Life says insurance brokers should be trying to sell as much level term insurance to people as possible between now and June, as life insurance taxation will soon increase premiums.
Thursday, December 3rd 2009, 9:46AM | 
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by Jenha White
Fidelity Life chief executive Milton Jennings says there is a lack of new clients and people need to be sold insurance as it's not going to get any easier.
"We have never seen as much change in the industry as we are now."
He says life insurance companies are going to have to factor in tax as of July next year, and the level premium is likely to go up 15 - 20% whereas yearly renewable term insurance can afford to bring the increases in over subsequent years.
"You can fix a premium in now for the rest of your life on level term. You won't get better premium level rates, people should be taking advantage of that.
"I've personally shifted all my business onto level term," he says.
Jennings acknowledges level term insurance is more expensive to get, so insurance brokers will have to find clients that can afford the change from yearly renewable term to level term.
"It's a no brainer to make the shift if you can though, the break even point is three to four years which is nothing on a 20 year contract."
Fidelity Life says this is a great opportunity as it's Platinum Plus plan has level income protection policy which has guaranteed premiums for all benefits - not just life cover
"It is quite unusual to guarantee premiums but we have, it's a unique product" says Jennings.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
| « Medical insurance requests speed up | Life insurance sales soar, as do lapses » |
Comments from our readers
Why do you have insurance considering you are a wealthy man, and have the ability to self insure with your financial assets? This looks like a campaign to glean more dollars out of clients to help the profit margins yet again.Sometimes YRT is the way to go, to be cancelled when it is not needed. And Milton may have his numbers wrong when you get ahead when leveling premium by about 10 years.
Comments please people.
You only have to look at this model based on health assurance via SX, too see how it is doomed.
Even AXA's level premium option, isn't guaranteed level and they increase the underlying rate whenever it is reqd, sort of defeating the purpose don't you think?
Good on Fidelity for doing this but bums will be burnt in the not to distant future.
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