Compensation Schemes for Investors (Life Insurance Products)

In uncertain times, investors get worried about the security of the monies that they may have invested with the different product providers.

The scheme that operates in the Republic of Ireland (Investor Compensation Scheme) pays compensation where a firm, authorised by the Financial Regulator, is unable to return investment monies owed to an eligible client due to its financial circumstances.

There is a limit to the amount that the Investor Compensation Scheme may pay in compensation. They can only pay 90% of the amount lost, subject to a maximum of €20,000, to each investor.

Companies like Standard Life operate in Ireland as a branch of their UK parent. Therefore, their policyholders are covered by the UK's Financial Services Compensation Scheme (FSCS).

The level of cover provided by the FSC Scheme (for policies issued after 01/12/2001) is 100% of the value of the policy up to £2,000 plus 90% of the balance without limit.


Featured Product : Standard Life Portfolio Invesment Bond

Is this a concern for you?

'Cheapest' Life Insurance

In the business section of the Sunday Independent there is a regular feature which analyses various financial products. It then offers a 'Best' and 'Avoid' recommendation. Yesterdays paper included the following :

Life cover

Increasing cover of €800,000 over 35 years for a 30-year-old non-smoking chap.

Best: Irish Life €77.13 per month

Avoid: Caledonian €103.89

Saving: €321.12 per year

Contact irishlife.ie or local branch

This recommendation is way off the mark for two reasons :

1. The correct initial premium for Irish Life is €93.17 per month. The premium quoted above is for AVIVA.

2. The €77.13 is increased by 8% per annum. The €103.89 is increased by 5% per annum. If you elected for the cheaper initial premium, you would end up paying around €48,000 more over the term, than if you had chosen to pay the higher initial premium.

So, what appears as a 'Saving' initially will actually cost you dearly in the long run. Someone has not compared these products on a like-for-like basis and the outcome is a misleading recommendation.

If you are in Business and haven't read this book: You probably should.

The Innovator's Dilemma - Clayton M. Christensen


I had to share this with you. Rarely do I get excited about a book: but when one comes to your attention that is a reflection of your own thoughts and business principles, you tend to enjoy it all the more. This one fits nicely for me, as the position it adopts has a strong relevance to part of my business model.

As I read through the opening chapter, where there were strong references to the disc drive industry, I though I was going to be bored to death. What had not hit me at that stage was that, if I substituted the words 'product or service' for 'technology', the underlying message of the book would blossom.

The following are the areas of the book that I thought were relevant to the Industry that I operate in :

* Your customers/distributors may not be the best market indicators if the whole structure of the market changes.
* You can do everything right in your business and still fail, because of changes in 'product/service' and market structure.
* If you focus solely on profitable products that are currently in high demand, someone else can come into your market, from below, and bite you on the backside.
* No demand at the moment does not mean that this will always be the case.
* It is not a management priority to allocate funding to low margin products that are not in demand, until the demand arrives. By then, the company are left sitting on their hands.
* Product providers leave the door of opportunity open for more flexible low-cost competitors that eat into your market share.
* It's a marketing challenge to create a market for a product that distributors will not sell because their customers are not demanding that particular version of a product: Yet.
* Product providers can't get their heads around the notion that just because there is no hard data available to work with, for research purposes, does not mean that there will not be a demand for an innovative service or product at a future date.
* Sometimes it is important not to listen to distributors (or customers)
* Some business models evolve so slowly that product producers and distributors are not interested until the demand takes off. By then they are left with a bucket of crap and can take a few years to catch up: If they are lucky.
* Companies should chase small markets [create them even] when everyone else is focused on the gravy train


This is just a summary of what I got from the content. If there are any Life & Pension Company managers reading this, all is not lost. The author provides you with a set of rules that you should adopt so that you are not the one that ends up with egg (or something worse) on your face. It's time to make up your mind whether you are an Innovator or just an Imitator.