Life and Protection Insurance for the Elderly
Summary:
The ABI is backing an initiative to make it easier for the elderly to buy life and protection insurance. We explain how.
It is currently not so easy for people over the age of 70 to gain life and protection insurance, yet ironically, it is perhaps at this time in peoples lives when these sort of products are of most benefit. The reason why purchasing these policies can be difficult is because of current restrictions in place known as the Age 70 rule. What this rule means is that any life or protection policies have to be sold as investments, rather than insurance products to people in this age bracket.
But now, the Association of British Insurers is calling for an abolition of these age-related sales rules. And because there is an ageing population and an increasing trend for people these days to start a family at an older age, the review is timely. (cheap loans)
The rule applies mainly to insurance products such as life and critical illness insurance. Many in the insurance industry have never understood why there should be a distinction, saying that these policies should be based purely on risk.
Part of the problem at the moment with the way the rules stand, is that many protection intermediaries are not authorised to sell investment products under the Age 70 rule. So as a result, they cannot offer protection products to their customers aged over 70 years old. Many people therefore do not buy these products at all. (find a loan)
The Financial Services Authority is in fact planning changes to the rules for life and protection insurance products to people aged over 70 but what they decide to do is yet to be determined. The organisation recommends two options to change the Age 70 rule. One is to increase the age to 80 and the alternative is to remove the age limit all together. (mppi)
The ABI believes that the current rules are not risk-based and inhibit consumer choice. The organisation says that applying a risk-based approach would serve consumers better. So as a result, it is backing the second option - the move to abolish the age restriction.