The Package Plan

One method of selling life insurance which is becoming more widely used today also deserves comment. This is the arrangement and sale of "package" plans by associations, unions and other groups, and also by insurance brokers.

Any such organisation which has a large list of members or potential clients can arrange its own scheme by devising a suitable package of benefits and arranging for it to be underwritten either by a single insurance company or through Lloyd's. Details of the package are then circulated to potential clients by post, with an attached proposal form which can be returned direct to the scheme's arrangers. Such package schemes, which are usually based on protection rather than investment benefits, have both advantages and drawbacks.

The advantage lies in the fact that the organisers, having existing lists of members, can budget their costs carefully and, on even a very low acceptance rate, sell considerable volumes of business at much lower costs than insurance companies can through their own outlets. A large part of this saving is usually therefore built in to the premium rates, which will often be significantly below those on comparable policies issued direct by life insurance companies. So it is possible to acquire protective cover at a useful saving.

The drawback is that the package is almost inevitably a compromise designed to attract the widest interest and the result is often that the actual benefits of the package genuinely suit the needs of only a small proportion of those circulated. For example, an automatic convertibility option may be included in a term assurance scheme. This may suit younger people who may wish in future to convert into a with-profit policy, but not older people who simply want cover and are unlikely ever to wish to convert.

While such schemes may offer a useful opportunity, therefore, they are no substitute for the careful reckoning that is required in planning one's own life insurance needs, and should be used only if they definitely fit in with the results of such an assessment.

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When the Salesman Calls

A great deal of life insurance is still sold in people's own homes. It is not just conventional and unit-linked companies that employ salesmen to canvass "prospects"; there are also the industrial life offices, and some friendly societies also actively promote their own schemes in some parts of the country.

You should think carefully before signing a proposal form offered by one of these salesmen on the spot, however attractive the policy being sold appears. It is always worth taking time to look into the proposal and comparing it with what is available from other companies. Sometimes... see: When the Salesman Calls

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