A controversy or lost opportunity when we talk about sum insured
How we talk about sum insured may be underselling insurance – and it is surprisingly controversial. One training manager I know thinks Fidelity Life’s trauma multi oversells itself by stating a sum insured which is the maximum possible payable for five trauma claims. They
think that could only be paid in rare circumstances so Fidelity Life should talk about a figure which is more likely. Although I am not sure about that, after all, if you consider that the typical policy life is slightly less than a decade the typical claim for the majority of policy
holders will be nothing. After all, insurance is about catastrophes and pooled risk: there must be more lucky non-claimants to pay for the unlucky claimants. But the idea ain’t all bad – more on that later.
In fact, the industry probably understates sums insured far more than it overstates them. Sure, with life insured the situation is simple. With living benefits, however, it is anything but simple.
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