We could see a market volatility-driven increase in life policy uptake, argues Dean Jones, head of paaleads.com.
Without having a moment to breathe, we already find ourselves in June and the new coalition government seems to be dominating the media and the thoughts of many on issues from capital gains tax to IHT.
May has been a very busy month at paaleads.com and one of the surprising things to come out of it was the increase in the volume of consumers looking for advice around life insurance. This month we saw an increase in enquiries of just under 10% and, albeit small, this is the first sign of increase since January 2010.
In January we touched upon a similar trend, seeing an uplift of 20% in a month which tends to see the lowest levels across the year. January in some ways seems a logical time for people to review the protection for a number of reasons. Typically, people will have spent time with family and loved ones over the holiday period and, may make them readdress their protection. However, since this January peak, levels of consumers seeking advice on life assurance dropped every month until May.
&’8232There are number of reasons why we could be seeing this rise. Firstly, in just over two week’s time, we will receive the results of the new coalition government’s emergency budget. Come June 22 we will see how exactly the government intends to reduce the UK public sector borrowing, which at present stands at £156 billion for the year.
One seemingly unavoidable result will be the reform of capital gains tax from 18% to 40% which I believe is a key driver behind increased planning to change or safeguard holdings before this reform takes place. One inevitable result of this will mean individuals will look to life insurance products to safeguard against any change. On a side note, I also expect consumers to begin investigating a number of other tax efficient products where the expertise of an IFA can really add value.
The other reason behind this could simply be the result of an increased awareness of the volatility in the current markets. Those exposed to any equities will be well aware of this volatility in the markets in the last month. The FTSE dropped to below 5,000 in May from a year high of 5,800 and this will have been an abrupt reality check to investors that things were not back on track and the threat of a double dip has not entirely disappeared.
Until stability returns to the markets, I believe a large number of investors will be looking towards life insurance products to give piece of mind and I wouldn’t be surprised if we saw further increases in uptake post emergency budget.