Would You Like Points With Your Life Insurance, Sir?

There are many reasons to consider buying life insurance, depending upon your age, financial and family commitments, and a host of other reasons; but now Tesco and Sainsbury's have introduced another - points for their store loyalty programmes.

Tesco are offering their Clubcard holders 2,000 points to sign-up, and Sainsbury's are offering 5,000 nectar points, incentives worth £20 and £25 respectively. The decision to tie the sale of Life Insurance into a promotion such as this has split opinion. One who can see the benefits is insurance company CBK principal Peter Chadborn who said: "As a consumer, I'd be automatically suspicious of anything needing an incentive to sell it, but this could be a shrewd move by Sainsbury's and Tesco."

However, Lifesearch spokesman Matt Morris believes that selling life insurance in such a way could negatively impact on the industry. He believes that people buying insurance after being swayed by 'gimmicks' such as loyalty points may be sold inappropriate policies, and therefore would ultimately think less of the industry. He is particularly concerned about the fact that neither of the superstores offers advice on protection policies. He said: "Customers who buy this way are doing so through an unadvised channel and therefore could be losing out on a very important insurance policy such as income protection. In some cases buyers would be better advised to take out two policies and put them in trust. Anyone buying in this way may not be getting the advice that they need."

Other concerns for the experts include the fact that the supermarkets are merely commoditising life insurance, and also that they could be taking business away from others in the industry. By focusing the customer's attention on price Chadborn believes that it detracts from life insurance and the plan as a whole. Most experts agree that the most important areas to concentrate on when buying life insurance are the quality of both the policy and what is right for the individual. They say that price issues should be secondary when it comes to deciding upon life insurance, and certainly incentives such as awarding loyalty points should only be considered after everything else.

As they say, the proof of the pudding will be in the eating; but experts will be keenly watching the uptake of life insurance products on which no advice is given, and on which the advertised incentive is superstore loyalty points. For Tesco and Sainsbury's the attraction is lucrative commissions, but at what price for their customers?

Andrew Regan is an online, freelance author from Scotland. He is a keen rugby player and enjoys travelling.