Advisers Divided on Front Loaded Premium Discounts

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Are you ok to advise your clients to consider taking out a new life insurance policy offering a front loaded premium discount?
  • No (62%)
  • It depends (26%)
  • Yes (11%)
  • Not sure (2%)

Advisers, it seems, are divided on whether they would be okay to advise their clients to consider taking out a new life insurance policy offering a front loaded premium discount.

Our latest poll found that while 58 percent were not happy to do so, a total of 40 percent would be happy to advise their clients to do so, with 28 percent agreeing that ‘it depends’ and another 12 percent saying ‘yes’ they were happy to do so. Just two percent weren’t sure.

This latest poll drew on our report looking at research which suggests that while new life risk policies with front loaded premium discounts can increase affordability in first-year premiums, they may be more costly to consumers over the medium-to-long term (see: Study Reveals Delayed Costs…).

The research indicates front loaded discount policies with stepped premiums have, on average, lower premiums in the first policy year, but higher premiums from the third policy year onward.

One commentator noted that there are very different types of discounts with some insurers offering big first year discounts; while others offer discounts that are not excessive and require no input from the client and still others have discounts that come with added benefits.

The same commentator added that the research cited in our story was commissioned by an insurance company that doesn’t offer discounts.

The poll will be open for another week and we are interested to hear your views …



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3 COMMENTS

  1. Well It is blatantly obvious which side of the argument the writer of this article sits. Why not report it accurately – Only 12% of advisers support upfront discounts! “It depends” does not mean an adviser is happy to recommend a policy of this nature. More like, if the policy shows to be competitively priced over a 5 or 10 year period then it is ok to do so, but apart from that it is nothing more than a rort that is a akin to misleading and deceptive practice. And done so at the predominant expense of the adviser.
    When insurers are across the board raising premiums for existing clients between 15% & 30%, it is an affront that the same companies offer these discounts at the expense and to the detriment of their existing clients

  2. My feelings exactly. Interestingly I asked one purveyor of a 25% up front discount if I could have a quote WITHOUT the discount. NO WAY !

  3. These polls ?? Really ! You can twist them anyway you want apparently ! This is a very simple issue really How long will the company offering the discount remain the number one choice ? In my limited experience of 42 years ??? Not very long ! In every case I have seen the company offering these cheap upfront discounts is forced to increase in year three ( sometimes year 2 ) Why ? Because it is not viable in the long run or for that matter the shorter period either to play “ catch up” with the competitors.
    It’s a trap to mislead gullible advisers and unwary clients and if advisers where “plugging” this on line their website or EDMs ASIC would be all over them for misleading conduct
    If something sounds to good to be true it usually is

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