The Exeter has launched into the protection life insurance market, with a new plan designed to appeal to two groups who often struggle to get affordable cover – those who are overweight and those who have Type II diabetes (and many will have both).
Managed Life offers reduced premiums for customers who positively manage their condition by lowering their HbA1c level (for Type II diabetics) or weight (for those with a high BMI – body mass index).
The time line for a new plan is:
* An initial underwriting decision is given and the policy goes on risk.
* The Exeter sets a control measure target – either BMI or HbA1c level. Higher and lower threshold are set.
* The customer provides evidence of their results against target annually.
* Each year if the lower threshold target is reached, the customer’s premium falls.
* If the higher threshold is exceeded, the premium increases.
* Or, if the target weight or blood sugar level is between the upper and lower thresholds, the premium stays the same.
* In a best case scenario, the customer could end up paying up to 35% less for their insurance by constantly beating the lower threshold target.
* If the customer’s numbers worsen and he or she consistently exceeds the upper threshold, a maximum premium limit applies.
* The Exeter relies on self-reporting regarding achieving the annual targets, but audits a random sample each year in order to protect all members’ interests.
Key features of the new plan include:
* Single life cover only, albeit with discounts for two linked life policies e.g. for partners.
* The plan is available to UK residents aged 18 to 80 inclusive.
* Quotes are through the IRESS system, where a rules based application journey uses dynamic questioning to gather all information needed.
* A delegated underwriting system means that if the adviser gets stuck on an underwriting question, they can send it to the client to complete and return it direct to The Exeter. This can be helpful where sensitive information is required.
* Terms are available from five years up to 50 years (but cover must end before the customer’s 90 birthday).
* Maximum cover is £3m; minimum is £20,000. Minimum monthly premium is £15.
* Cover can be level or decreasing (when the sum falls in line with the capital outstanding on a repayment mortgage at an 8% interest rate).
* Terminal illness benefit is included as standard.
* As is accidental death benefit.
* There is also a mortgage-free cover benefit.
* The confidential support service Exeter Assist is included on all policies, as are a GP helpline and private prescription service.
What They Say
Chief executive Andy Chapman said: "Managed Life is a bespoke life insurance plan for an underserved sector. For too long, insurers have focused on healthy lives and ignored the increasing number of people who suffer from long term health conditions."
What We Say
"Going into a new market is an exciting time for any insurer and The Exeter will have thought long and hard about whether and how to do so and that is apparent in this product design. It would have been easy to go for a ‘me too’ product and to focus on price, but The Exeter has sensibly instead targeted groups who currently often struggle to get affordable cover.
"Indeed, the industry’s focus on price at all costs has led to large numbers of people feeling disenfranchised, as they both have to complete tens of pages of detailed questions and even then far too many can’t get cover or have to pay a much higher price than their ‘quote’ suggested. Such a start also leads many people to believe (wrongly) that if it’s that hard to simply get cover in the first place, Heaven help you if ever you need to claim!
"The Exeter’s initial focus on people who are overweight or who have Type II diabetes targets a large group of people – more than four million however you count it. Many more are on the path to diabetes by not managing their weight, yet all most insurers do is price their risk assuming they will go on getting heavier. The new plan has potential to be rolled out to other groups too but starting with just these two looks to make good practical sense.
"So it’s refreshing to see The Exeter do something different. It is not the first to introduce dynamic underwriting – where the customer enters into a contract with the insurer and is rewarded for doing things that they should almost certainly be trying to do anyway. But it has come up with an attractive proposition that is quick, simple and works.
"Level or decreasing cover is available and terminal illness benefit is built in. I’m not a fan of accidental death benefit (why would your family need more money if you die by accident rather than illness?) but it’s included at no extra cost, so you might as well take it.
"Trusting customers to self-report progress against target thankfully avoids over bureaucracy (and cost) and auditing a proportion of customers each year is a sensible safeguard for all honest members and it’s something professional bodies such as the CII and PFS do with their qualified members each year, so no one should really complain about that either.
"Downsides? Well, The Exeter is not targeting other groups (at least not yet) and of course some customers will simply not meet the targets set, despite their best intentions upfront. Allowing for that, a maximum premium applies but even so, some might turn out to have been better off going down a more conventional underwriting group.
"Overall, this is a very welcome new entrant to the term insurance market, and we are now starting to see perhaps the biggest revolution in protection insurance (what I’ve termed ‘dynamic underwriting’) emerging, as more insurers look to enter into genuine two way active mutually beneficial contracts with their customers. Given that we hope our customers will stay with us for many years, that has to be commendable."