CIExpert’s Single Is Best campaign has come under fire from advisers for promoting bad advice in situations where recommending two single life policies is not the best option.
However, CIExpert director Alan Lakey has defended the campaign highlighting key reasons for first considering single life policies, while intermediary firms LifeSearch and Reassured along with other advisers have publicly backed the project.
Lakey launched the campaign this week calling for the protection industry to actively encourage the recommendation of individual protection plans as the preferred option for couples, and triggered a fierce industry debate.
Samuel Marriott, head of Vista Evolve at Vista Insurance Brokers, told Health & Protection the approach was “just wrong” and that the campaign should instead focus on improving the products such as separation clauses.
Likewise Home Group Financial co-founder Miles Robinson said he could see angles where joint policies would be most appropriate than a pair of single plans.
Promoting bad advice
“The issues is I have mainly is the fact that CIExpert has done this campaign to default protection policies on a couple to two single lives rather than a joint life,” Marriott told Health & Protection.
“It’s just wrong to put in any kind of default. I’m not saying joint life is better than single or single is better than joint, because in some cases joint life is better than two single policies and in other cases two singles are better than joint.
“But from what I’ve read, their campaign is, the headlines certainly, are saying you should always do two single policies.
“That causes a massive, massive issue within the industry because most advisers won’t read anymore into it than an industry leader saying, ‘Oh we should do this,’ and they’ll just default to that.
“So I’m worried that networks especially are going to look at it and say, ‘If CIExpert have said this, and they’re a compliance tool, then we should do that as well’.
“For me, it’s promoting bad advice which is terrible and this should not happen.”
Marriott added he was interested in what the regulator had to say about the campaign.
“I’m very interested in what the FCA thinks in looking at this campaign, because I really don’t think this is a campaign that should be running at all,” he continued.
“The main thing is that it’s being said that joint policies are sub-optimal and the fact that for a couple of pounds extra you can get double the cover which is true, but if there is no need for that cover then why are we charging customers extra?
“In a suitability report you have to justify the need for the policy. It’s not the want for the policy, which I think people are forgetting.
“If someone wants something that’s a non-advised sale, it’s not an advised sale. So if you then say: ‘In my justification, it was just £2 extra and we got double the cover’. Well that’s not a need.
“If there is need for it, by all means do it, it’s not a problem at all, but you can’t just say, ‘Well it was a couple of quid extra so we did it anyway’.
“There is no need for that policy and there is no justification from an advice point of view to do it.”
Target separation clauses
Marriott, who also posted his thoughts on LinkedIn, argued that in certain circumstances joint cover would be better than two single ones, but also acknowledged there were problems with it that the campaign should focus on improving.
“It is the fact that separation clauses in joint policies aren’t good at all, so that’s very difficult,” he said.
“Alan Knowles and Johnny Timpson have said on LinkedIn if there is an abusive relationship and you want to separate it or you get divorced, it’s difficult to separate a policy.
“So the campaign should be more around getting providers to improve those clauses and getting more flexibility.
“I’m all for that completely, but for them to say because of that minimal scenario that may or may not happen in the future, I hate to sound crass but what are you going to put in a justification letter?
“That because a person could get abused in future, I’ve done two single plans. That’s not going to fly at all, you can’t base advice on that.
“So while I agree with some of the things, I think some people are being swayed because of that clause to do two single plans.”
Not fit for purpose
Marriott received backing from Miles Robinson, co-founder at Home Group Financial.
Robinson told Health & Protection: “Advice is about recommending what is suitable for the client, this ultimately means recommending a policy that is suitable or fit for purpose and designed to provide the outcome the client wants.
“This means a joint policy to protect at joint mortgage on a decreasing basis would be suitable.
“I would struggle to understand what rationale there would be for single-policies here – once the mortgage is cleared the policy has served its purpose.
“On another angle, life and critical illness used for private healthcare, covering a salary or similar, then a single policy would make sense.
“My view is it’s all about the purpose, not if you pay a few quid more on a single plan you’ll get double the cover.
“I understand advisers trying to get value for the customer, but this also goes against suitable advice for the consumer as technically this would be convert-insured.
“If you have good conversations with clients to explain the pros and cons and define what you’d recommend then the customer can make informed choices of what is right for them personally.”
Compliance default
In response to Marriott’s comments, Lakey told Health & Protection that everyone is entitled to their opinion, but wanted to shift some default compliance positions.
He added that where there was a justification for using a joint life plan this could be recommended.
“We are not arguing that single life plans must always be used, we are saying that rather than joint life first event being the compliance default, it should be altered to two times single plans, unless there is an overriding rationale for a joint life plan,” Lakey said.
“At the moment there are compliance departments that insist on a joint plan to cover a joint mortgage. This will generally prove slightly cheaper and this appears to be the main thrust of this compliance diktat.”
Lakey added that when he and LifeSearch founder Tom Baigrie met with the Financial Ombudsman Service last year, the regulator confirmed it did not have an automatic bias towards the cheapest plan if there were compelling arguments in favour of single plans.
“As long as it can be shown that the clients had options explained to them alongside premium differences and that a conversation took place where single plans were recommended and agreed, they saw no reason for concern,” Lakey continued.
“There is no reasonable argument that a joint life plan is a better choice. It might be slightly cheaper, but in terms of value it stands as inferior.
“Consumer Duty focuses on outcomes and value and two single life plans meet that criteria whereas a joint life plan would struggle.”
Importance of personal independence
Lakey further maintained the the issue of personal independence was “really important”.
“In 2022 there were 80,507 divorces with 12.9 years being the median duration of a marriage,” Lakey continued.
“Around 42% of marriages end in divorce and it appears that for non-married couples the percentage that separate is higher.
“Many of these relationships end in acrimony and, as Johnny Timpson has pointed out, this can involve coercion and loss of cover for one or both parties. Having individual plans would remove much of this acrimony.
CI rationale ‘overwhelming’
Lakey also argued that when it came to critical illness plans the rationale for single life plans was “overwhelming”, especially where children’s cover was concerned.
“It offers two times children’s pay outs instead of one, and if using two different insurers it can extend the coverage to encompass conditions that a joint life provider fails to include,” he continued.
“On a critical illness or death claim the survivor retains his or her protection, but with a joint life ending on first death the survivor might well find it difficult or impossible to obtain a replacement plan at a reasonable cost.
“One party might not want to disclose historical medical information and on a joint plan their answers will be available to the partner.
“For example, certain illnesses are primarily gender-linked. Male claims are close to 20% for heart attack against 3% for women. With cancer it is around 50% men and 80% women. As a result, the knowledgeable adviser can select individual plans based on the condition coverage.
“Often consumers will take a mortgage protection plan without any additional family protection. If they have two plans then should both die, say in a car crash, there would be additional funds available for the guardians of any children to use for the child’s benefit.”
Abusive relationships
Replying to Marriott on LinkedIn, Cura Financial Services co-managing director Alan Knowles, challenged him to consider spouses in abusive relationships.
“Have you ever had a client separate due to an abusive relationship and then have the abuser hold the joint policy over their ex?” Knowles said on LinkedIn.
“I can tell you it’s horrible and as insurable interest only needs to exist at point of sale, then there is little that can be done to stop it. Separation clauses are poor and often need both parties to sign, or have sight of divorce papers, which can take a long time and what if they weren’t married?
“Add on to this that people’s health changes. When you review cover in the future and one is ineligible for new cover it massively complicates arrangements for new cover with clients often left overpaying to keep the existing plan and do a top-up for one life.”
Knowles agreed that at point of sale a joint plan may seem better as it is cheaper and there is only one mortgage.
“But nobody knows what’s around the corner, for example health changes, claims, separation,” he continued.
“Therefore I can’t think of a single reason why joint life first death (JLFD) would be better unless the client is a lucky one who doesn’t have these things happen. Let’s not forget that 50% of marriages end in divorce.”
Campaign backing
Lakey added that the “vast majority” of comments he had received were fully supportive of the campaign and since then LifeSearch and Reassured have publicly backed the proposal.
Paula Bertram-Lax, chief customer and people officer at LifeSearch, said: “It’s important to recognise today that people’s lives are no longer linear, and the ‘traditional’ milestones of getting married, buying a house, starting a family and settling down aren’t always the path that people follow – in fact, they rarely do. At LifeSearch, we’ve recognised this among our clients for some time now, and to uphold our purpose of ‘protecting people, properly’ our advice needs to be better prepared for future changes.
“It’s for these very reasons that we’re delighted to sign up to the pledge and support the CIExpert ‘single is best’ campaign. Recommending 2x single policies for couples’ protection needs offers a more solid starting point for advice – providing for more tailored coverage, greater flexibility and better value. And, importantly, a demonstrable commitment to better customer outcomes and alignment with Consumer Duty.”
Lucy Brown, senior corporate relationship manager at Reassured, added: “Ensuring our clients can access the best possible protection outcomes available is fundamental to the principles we have at Reassured.
“CIExpert’s Single is Best campaign and the insights in the latest report, clearly evidences the reasons why individual plans offer our customers better outcomes than joint plans so Reassured is fully behind both the campaign and pledge.”
Consider the wider implications
Protection Review chief executive Kevin Carr also backed the campaign and said it was a “great debate” for the industry to be having.
“This campaign is all about encouraging the industry to move the default position from joint life to single life, which I fully support because in the majority of cases I believe single life is best advice,” Carr said.
“Too many advisers assume joint life is best without considering the wider implications, but we’re not saying advisers can never use joint life cover as there are situations where it is suitable, such as joint whole of life for IHT.”
Fellow campaign backer Neil McCarthy, chairman of the Protection Distributors Group, agreed adding that the PDG was glad CIExpert’s campaign had triggered some debate.
“The campaign is focused on joint life first event plans, not joint life second event plans (that do have their place in some financial planning situations),” McCarthy said.
“Also, as Emma Thomson points out in her comment, the campaign is aimed at the many situations where critical illness is a benefit. Reading the report gives advisers the opportunity to review the evidence presented and clearly positions the advantages of utilising single life plans when looking at potential customer outcomes. We would encourage advisers to read the report and make up their own minds.
“How advisers use the evidence is down to them, but it certainly challenges the belief in many places that a joint life plan is the default option and gives the adviser the chance to focus on the overall value and possibly product nuances that make two single life plans the better option.”