Shifting to level premium policies not always right

Triplejump chief executive Cecilia Farrow said she had seen "shocking" advice given to clients and based on anecdoctal evidence, there were many cases where clients were shifted from yearly renewable term (YRT) contracts to level contracts, lock, stock and barrel.

She said the worst case seen recently was a one-pager that had been written by an adviser to a couple who were in their later years and being farmers, had reasonably extensive debt. The one-pager urged the client to consider changing all their term cover over to level with a table showing that the client would save close to $500,000. The quote was for Level to age 80 without CPI, however the YRT was quoted on CPI.

"Now as far as I'm concerned that brings our industry into disrepute and it is that kind of behavior that goes on which is a concern," said Farrow.

She has had a few working parties investigate the YRT versus level paradigm and as a result the advice Triplejump has provided among its franchise network is that it is very hard to find an argument that supports the idea that customers are better off paying a level premium versus a rate for age premium balancing all the other considerations that should be taken into account in providing advice to clients.