Life insurers pledge care in selling

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The Independent Online
NINE leading life insurance companies have promised to improve the way they sell their products after conducting a survey into why so many customers cash policies in early, writes Maria Scott.

The life offices, led by the Prudential Corporation, commissioned the survey after the Securities and Investments Board published figures at the end of last year indicating that up to a third of peoplecashed in life- linked savings policies within two years of signing up.

The SIB's figures caused a stir in the industry and many life insurers privately disputed them.

But the nine that chose to follow up the exercise avoided a head-on confrontation with the regulator over rates of early surrender and chose instead to investigate the reasons for this low level of 'persistency'.

Survey Research Associates interviewed 7,500 people who had recently let policies lapse. About two thirds - 68 per cent - blamed changes in personal circumstances such as redundancy.

Keith Bedell-Pearce, a director of Prudential Corporation, denied that the survey showed that too many people were being sold long- term policies unsuitable for their needs. But he accepted that more care needed to be taken by insurance salesmen when establishing investors' priorities and exploring the consequences of changes in circumstances.

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