High-pressure funeral sales tactics could be outlawed
Colin Drury
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Why your life is worth less but costs more outside London
Life insurance is one of those milestone purchases – the coming-of-age parting with cash that places you firmly in the “adult” life box. Designed to protect the people we care about (or at the very least are responsible for) with a lump sum to start to fill in the financial gap we’d leave behind should we die prematurely, most of us are prompted to buy it by a significant event – often the birth of a child. With a protection product like this it makes sense that the older you get, the more expensive it becomes. The cover a 23- or 24-year-old would pay an average of £12.61 for comes in at £31.16 for your typical 55-64 year old, for example.Your monthly premium will also vary depending on how long you want the cover for, ranging from as few as five, to as many as 50, years. Then there’s the other critical, though uncomfortably un-British, decision to make – how much you think you’re worth. The latest life insurance snapshot, compiled by price comparison site Comparethemarket.com, shows the most popular figure is more than £250,000, as we tot up the value of our incomes against outstanding mortgages, debts and other everyday costs, with another fifth opting for £200,000-£250,000.Finally, you’ll need to decide whether you want your insurance to remain consistent for the whole period, known as ‘level term’ or you’re keen to simply protect a mortgage – a cheaper option as the payout decreases in line with your outstanding debt over time.So far, so controllable. But the latest analysis shows that one of the biggest differences in how much we each pay to insure our lives isn’t how old we are or how many kids we have – it’s where we live.On the surface of it that’s no surprise. After all, these policies are really all about securing the home over the heads of the people we love if we’re no longer there. And as we know all too well, the cost of those homes, and the size of the debt to secure them in the first place, varies dramatically by location. And, as Kamran Altaf, head of life insurance, for Comparethemarket.com notes, the gap is narrowing.“Over the past year, we have seen some long-term trends start to reverse in the life insurance market. It is most encouraging to see a decrease in regional disparities across the life insurance market. The north-south divide has reduced significantly, paying £17.05 and £22.40 per month respectively in the northeast and London. Last year the gap was far wider at £11.98 and £28.42. The capital’s city-dwellers can now expect to pay around £22 a month for their life insurance policy – significantly less than in June 2018.“It is unsurprising that the market has such strong regional disparities, as life insurance is inextricably linked to house prices which tend to be higher in London and the South. However, the data suggests that life insurance is becoming more affordable for those living in the capital.”A closer look at the numbers in fact shows no correlation to current property prices at all.The latest house price data from the Office for National Statistics (ONS) shows that despite a marked downturn, the average property price in London came in at £472,000 at the end of April this year. In the South East the figure is closer to £319,000.But the Comparethemarket.com figures show the average monthly premium paid in London – £22.40 – is less than that paid in the South East at £23.63. Despite paying almost £200,000 less for their homes than their London peers, East Anglians are forking out around £5 more a month for their life cover.Most remarkably, in Northern Ireland, where the average property price is the lowest regionally at £135,000, policyholders there are paying the highest premiums – at almost £32 a month.The Association of British Insurers (ABI) argues that looking at a regional breakdown alone doesn’t tell the full story. Certainly, thousands of people with a huge range of circumstances and needs take out life cover of varying sizes every year that will produce all manner of different premium prices. But common sense suggests that cross-section of needs, circumstances and sums assured will exist in each of those regions too. Roughly, you’d expect the same proportion of 50-somethings to decide to take out cover in Liverpool as they would in Luton, for example. Surely a similar number of people will have half their mortgage left to pay off in Scunthorpe as in Stockwell.Even Comparethemarket.com which produced the regional data based on thousands of customer purchases from different providers between March and May this year didn’t really have an answer. Determining how much we pay to insure our lives (and anything else for that matter) is based on a complex series of precise calculations made in an underwriting process. It’s hard to see how that process could produce such stark differences based on geography alone. But it’s also hard to shake the feeling that if you’re outside the capital you might be getting a worse deal on your life cover.
High-pressure sales tactics used by some funeral providers could be outlawed under new government proposals.
Companies found guilty of bullying or rushing people into buying expensive pre-paid options would face fines and criminal charges, if the plans are given the go-ahead.
Customers would be protected by a specialist ombudsman, while the Financial Conduct Authority would regulate the industry in the same way it currently does with insurance firms.
The proposals come after some funeral providers were found to be using misleading sales tactics to get vulnerable customers to cough up more than was necessary for services.
Announcing the plans, John Glen, the city minister, said: “Planning for your funeral can be a difficult experience, but one that many of us will need to go through at some point in our lives.
“It’s shameful that there are those out there who look to prey on people when they are in this often emotional and vulnerable state.
“That’s why I’ve taken the decision to regulate pre-paid funeral plans, so people can have more confidence in the products they’re being offered and peace of mind that their affairs will be handled correctly.”
He added that the action was being taken after demand for pre-paid funerals – where a person organises and pays for their own ceremony – grew by almost 200 per cent between 2006 and 2018.
The announcement comes just months after the competition regulator revealed it had launched an in-depth investigation into funeral directors amid accusations that grieving families were being ripped off.
Big firms in the sector have hiked prices by between 6 and 8 per cent a year for the past eight years, the Competition and Markets Authority said, while adding that some local authorities have also increased fees for burial and cremations.
The government consultation on banning high-pressure sales tactics is now open.
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