Fidelity Life enhancements

Along with introducing a range of system upgrades, Fidelity have also released a series of changes to their product suite effective 15 November 2021.

Some of these changes include:

  • Enhancements to their CPI and Indexation option
  • Changes to Survivor's income cover
  • Amendments to the total disability and Trauma (Severe inflammatory bowel disease) definitions
  • Funeral fund and Defined disability income protection cover will be removed from sale
  • Clarity of wordings and cover name changes to various policies

Additionally, these enhancements have not led to any pricing increases and full information can be found on the Apollo Illustrator or the attached article. We have received the full range of policy documents from Fidelity and are currently working to release the next database with these updates in the next few weeks.

Please feel free to email us on info@quotemonster.co.nz if you have any questions 


FYI: Are you looking to compare Funeral plans?

Here is a handy hint for Research and Advicemonster subscribers! 

If you're looking to compare a Funeral Plan, you can access our static ratings and policy documents directly on Quotemonster.

Once you've logged in, click the Research Tools button, the the purple Research Tools tab and scroll down to "Funeral Plans" 

Funeral

 


Consumer NZ seeking to end the sale of funeral cover, and more daily news

Consumer NZ has again criticised funeral insurance policies citing high premiums. Jon Duffy, Consumer NZ CEO used an example of an 85-year-old policyholder who has paid $18,900 in premiums after taking out a $10,000 funeral insurance for herself and her son in 2003. Fidelity Life denied requests to refund the additional amount paid in premiums as the policy had worked as it was designed. Jon Duffy has said that charging customers excessive amounts to cover a guaranteed event isn’t acceptable.

“Consumer NZ has taken aim at the poor value of some funeral insurance policies, highlighting a complaint it received from a customer who paid $18,900 in premiums for a policy worth only $10,000.

 

Consumer NZ chief executive Jon Duffy says the customer, an 85-year old woman, took the insurance out in 2003 to cover herself and her adult son, and was given cover of $5,000 for each life insured. Over the next 17 years, she paid out almost $9,000 more in premiums than the policy would ever have paid out.

 

The insurance was provided by Fidelity Life, which has refused to refund the additional premium and says the policy had worked “as designed.” Duffy says that since funeral insurance covers an event which is guaranteed to happen, selling funeral policies that result in customers paying thousands more than they would ever get back “doesn’t wash.””

This is a curious position - to define the value of an insurance policy solely by the payment that would come from it. For example, over the years, I have definitely paid in many thousands more in premium for car insurance than they have paid me out. It enables me to drive on the roads without fear of ruining someone else's life, or my finances, by an expensive crash. I will never receive back in claims what I have paid in premiums, but I still got - and continue to get - good value from the contract. 

When asked to comment the FMA stated that funeral insurance had been identified as a product that offers customers poor value in their joint life insurer conduct and culture 2019 review.

The FMA appears to have a more nuanced view, simply citing poor value:

“In response to an enquiry by Insurance Business, the FMA noted that it had already identified funeral insurance as a product that “often provides poor value” in its 2019 review into life insurer conduct and culture, conducted alongside the Reserve Bank. 

 

“The review considered funeral insurance to be a ‘poor value product’ and consequently had poor outcomes for customers,” it stated. “[The review] also provides an example of poor conduct involving funeral insurance.””

In part, poor value is a function of the small sums insured in these products: the administrative costs of insurance companies, especially using manual processes common for this market as many of these consumers struggle with the internet, make each policy subject to a relatively high component of administrative costs. 

Consumer NZ is looking to end the sale of funeral insurance and other products that offer customers poor value.

 “Consumer NZ says it will push for a law change that will prevent companies from selling funeral insurance, along with other products which offer poor value.” Click here to read more

I think that Consumer are referring to their support for new draft conduct law, which is also supported by the industry in concept. The advantage of a principles-based approach is that blunt instruments, like banning all funeral cover, can be avoided. After all, if you are 67, have several serious conditions, and no financial assets, but you wish to avoid burdening children with your final expenses, then a $75 a month will cover that financial risk, right now. There are simply not many other solutions, except save, and the cost will be borne by others should you die. Of course, if you keep paying it until you die, you may pay more than the sum insured. Life insurance is something best replaced by financial assets at some point in your life. 

FSC Connect Webinar : Media, Journalism and Opinion through COVID-19

FSC: Get In Shape Session 6: An opportunity to redesign your advice process

Financial Advice: Trusted Adviser mark achievable for all members over time: Shanks


Daily news update: Partners Life discontinues funeral cover, and more stories

Partners Life announced that they will no longer be offering funeral cover to new applicants as they have found that demand for the product is minimal. Although this decision was made earlier in the year, Partners decided to prolong the announcement date to ensure COVID-19 updates did not overshadow this announcement. Customers with existing cover will continue to receive product enhancements.

“As such, we have made the decision to discontinue Partners Life Funeral Cover for new policies effective today (15th June 2020). While this change may seem sudden, we had originally intended to discontinue Funeral Cover earlier in the year, however wanted to ensure it did not get swept up in, or lost amongst COVID-19 related changes and communications.

Of course, clients with existing policies will continue to remain covered and receive product enhancements and full support from Partners Life for as long as they stay in-force, as is the case for all existing Partners Life policy holders.”

In other news:

Insurer says May, June claims levels are almost back to normal

COVID-19 has increased demand for financial advice

Alert Level 1: what have advisers learnt from lockdown?


Quality Product Research Update: V105

We have just uploaded QPRV105 onto Quotemonster and have also distributed it to all other subscribers. This version includes the following changes:

  1. Momentum Life added for Life
  2. AIA Business TPD, Trauma
  3. Accuro update to Smartcare and Smartcare+
  4. Income Protection review changes
  5. All funeral providers updated
  6. Review Funeral Cover item

Probably the most significant change is to income protection. You will note a narrowing of the range from the top to the bottom of income protection scores, due to reduction of the incidence rates for a series of secondary cover items. 


Funeral Insurance an Expensive Way to Cover Costs

Consumer NZ has warned that Funeral Insurance could be the most expensive way to pay for your final send-off. 'Consumer NZ reviewed 10 policies offering $10,000 funeral cover for a 64-year-old. The review found that by age 84 the amount paid in premiums exceeded the $10,000 cover with most policies. In some cases, the insured person would have paid twice what they were entitled to be paid out.' Read more from this article on Stuff.

We are continually surprised to find that as many as a quarter of all funeral cover clients could have easily purchased fully underwritten cover. They were simply attracted by the convenience of not having to answer health questions. 


Crowdfunding is Not a Replacement for Life Insurance

Apparently creating a fundraising page to fund funerals or support family members after someone's death is becoming increasingly popular. The average amount raised on funeral, memorial and tribute pages on fundraising site GoFundMe is $2,200 USD.

"No Life Insurance, Help Spouse" is the headline on a current GoFundMe page set up after a woman's husband died while ziplining in Costa Rica, the page has currently raised $7,495 USD. Just think how even just $50,000 of life insurance would have made a huge difference to them - and it is typically available for less than a dollar a day. 

Click here to read more about the craze of crowdfunding and how although a few thousand dollars can help out surviving family it is well short of the kind of meaningful aid that would have been provided by a life insurance policy.