Life assurance disclosure: the PIA reports on the first three
years of the regime
In its third report on Life Assurance Disclosure,
the PIA has indicated that it is still not happy with a number of
developments in this area and it intends to bring forth proposals
to deal with these concerns.
The principal concern is that key features
documents tend only to illustrate the amount which an investor will
get back on cashing in the policy if the premiums are maintained
throughout the full term. There is often no indication of the value
if policies are converted to paid up, or a premium holiday is
taken. The PIA therefore proposes to extend its disclosure
requirements in this area to improve transparency and to encourage
In addition, the PIA is concerned that competitive
types of long term investments are not sufficiently available to
small savers. Many policies currently have minimum levels which are
comparatively high, and the PIA is looking at ways in which this
problem can be addressed.
Finally, the PIA is concerned that the commission
paid on pension income draw downs varies widely between companies
and this may give rise to the risk of biased advice.