Beneficiary nomination is a simple and often faster way to ensure claim payouts reach the intended recipients even when trusts are being put in place, according to Ruth Gilbert, partner at Insuring Change.
Speaking at Health & Protection’s Protection Forum, Gilbert also called on advisers to “share the love” and reward providers who paid claims swiftly and easily.
Gilbert (pictured) said: “The simplest way to make the biggest improvement for protection and consumer outcomes is to get directional benefits for all term policies sorted out from day one of the cover.”
This, she argued, was even the case where trusts were being put in place because this can take some time.
“Even if you are doing trusts, but there’s a delay at the start, in those places where there’s beneficiary nomination available under the policy, please do use that because early death can happen,” she emphasised.
‘Show your love’
Addressing the issue of claims more widely, Gilbert urged advisers to support those insurers who were doing a good job in claims payments and processes.
“Something that does move the dial is when advisers are asking for things, but also when they show that they really value improvements,” she said.
“One of the roots for claims not being as good as they could be is under-investment in my opinion. Claims has always been the Cinderella.
“So to the extent that it is possible, show your love to those insurers doing best at claims – obviously that is a part of the ecosystem that can help to encourage further investment – and that is happening.”
But, it is also important to be mindful of the fact that the worse could happen – and to plan accordingly.
Speed of payment
Returning to the benefits of beneficiary nominations Gilbert highlighted another big issue these could improve was the speed of payment.
“Payment speed is the thing that the FCA highlighted in their bereavements report,” she said.
The FCA found the time taken for settling life claims was between 53 and 122 days but did not clarify whether that was working days or calendar days.
“I think its probably working days, and that puts you in a zone of two and a half to five and half months,” Gilbert continued.
And while this was a better average than in 2010 – it was “still too long.“
Unmarried couples
As problematic as that can be – Gilbert noted that the situation can be even worse as there can be a bigger problem with couples who take out insurance but are not married.
“Why does that matter?” she asked.
“Well, unless those policies are being set up right to get the legal ownership in the hands of the person the money is meant for – usually the other half – they’re not going to get it – because they probably have no will.
“For those that have done a will, okay problem solved – although we’ll have to go through that tedious probate process, but at least they’ll get their money in the end .
“But for those that have not got around to it – which let’s face it, who does a will under the age of 40 – those are the people that risk not getting the money at all.
“We do see examples of this and they are absolutely awful, and its totally unnecessary.
“We’ve got a huge beneficiary gap because people are just not doing trusts. That’s the harsh reality.”
She emphasised: “If from day one you’ve selected beneficiary nomination then the partner that was expecting the money gets that money.“
