When Alf Roberts from Coronation Street died from a stroke the day after his life insurance policy expired on New Year’s Day in 1999, his wife Audrey was left both heartbroken and penniless.
Not only had she suddenly lost her husband, she was now facing a financially uncertain future because Alf’s insurance policy was not going to pay out.
The storyline attracted lots of attention, not just because of the death of a much-loved character, but also because it raised the importance of having up-to-date life cover.
It also led to a surge in enquiries among consumers wanting to check their own protection arrangements by taking out new policies or renewing existing ones.
Twenty-six years later, this issue is just as relevant today, with an article in The Telegraph last month covering a case where a woman recently diagnosed with MS, found herself facing financial difficulty when her husband died four days after his £140,000 life insurance cover had expired.
Despite paying into his policy for 19 years and living with early-onset Alzheimer’s, his sudden death from a ruptured bowel occurred after the end date of the policy – leaving her without a pay-out.
No substitute for proactive, ongoing advice
Situations such as these are heart-breaking and sadly, often make the headlines, for all the wrong reasons. But they do highlight a crucial truth: life insurance only delivers its value if it remains in place when families need it most.
Ensuring that happens depends heavily on regular adviser contact.
In this particular case, the widow said she received no warning about the policy ending. However, the insurer has insisted that both the client and their broker were notified about the policy’s impending expiry date in advance.
The insurer also said it sent out an annual statement every year to keep the policyholder informed.
While annual statements are certainly valuable prompts in reminding clients their cover is coming to an end, they are no substitute for proactive, ongoing advice.
Clients’ needs shift as their lives do – illness, family changes, house moves and financial pressure can all heighten the importance of cover.
Unless advisers regularly revisit these needs, gaps in protection are almost inevitable – often with devastating consequences.
Some advisers say they remind clients six months before a policy is about to expire, and while this is better than nothing, in reality, that’s far too late.
Reviews should take place every year or two throughout the policy term, and at least a year before cover ends.
Better prepared
It can easily take six months just to obtain medical evidence for a new application – by then it may be too late to arrange replacement protection.
In this case, the adviser could have undertaken a review in advance, but who is to say the couple would have chosen to extend the cover even if they were able to?
Plus, at the time the warning that the plan was due to end was issued, the policyholder’s health would have prevented him from taking out new cover anyway.
But at least they would have been better prepared.
It’s a sad reality that when cover ends unexpectedly, the financial and emotional impact on families can be devastating.
But it’s also important to remember that insurers must be fair to all policyholders and apply terms and conditions consistently – they cannot bend the rules for one case without undermining the system for everyone.
Advisers can make a real difference by keeping in regular contact with their clients, ensuring they fully understand when policies end and by keeping their cover aligned to the evolving circumstances of each of their clients.
Regular reviews aren’t just best practice – they’re a professional duty – and can often make a difference between a family being financially secure or left struggling at the very worst of times.
