The Financial Standards Authority has announced that it is to consult with relevant organizations on changing the so-called 'age 70 rule' for term assurance products, the Association of British Insurers has reported.
The rule means that it is much harder for people who are over 70, or will be over 70 during the term of their policy, to obtain such cover because it can only be sold under rules for investments rather than the standard rules for general insurance.
Many protection intermediaries are not authorized to sell under the investment rules, meaning that they cannot offer valuable protection products to an increasingly significant group of consumers.
Chris Kenny, the ABI’s director of life and pensions, said: The ABI has been campaigning for a long time to change this rule, so we are very pleased that the FSA is now taking action. We will be submitting a detailed response to the consultation setting out our views in full on the more complex aspects of the issue.
In our view, the best result for consumers is to get rid of all arbitrary age-related rules on these products. Instead, products that have an investment element should be dealt with as investments under the coordination of benefits contractor, while those that are purely insurance protection with no investment element should be dealt with…as insurance.