The body has also welcomed an address given by the Financial Services Authority (FSA) earlier this week at the ELSA/LISA European Life Settlement Trade Mission in London.

The regulator raised concerns over the quality of marketing materials relating to traded life policy investments and suggested that much more detailed and prominent risk warnings should be included in the literature.

However, the FSA also made clear that it did not inherently oppose the use of life settlements by sophisticated retail investors.

ELSA chairman, Patrick McAdams, comments: “We welcome both the dialogue and the commitment from the FSA, in particular its assertion that it is intervening earlier by shifting its focus upstream for all complex products, including those backed by life settlements.”

He adds: “Ever since its formation last year, ELSA has been championing greater regulatory consideration of this sort, which would force much more detailed consideration and disclosure of asset risks and how these are managed.”

Life settlement backed investments (which turn life insurance policies into tradable assets) are an asset class that has expanded rapidly as a result of the financial crisis.

Earlier this month ELSA opposed calls from the American Council of Life Insurers for a ban on this form of securitisation on the grounds that it could increases the risk of fraudulent policy applications.

According to ELSA, a growing understanding of the asset class is being exhibited by financial intermediaries, institutions, discretionary wealth managers, and high net worth investors.

According to the research 24% would be able to access only £100 without borrowing, and that without borrowing the average household would have access to only £914, under half of average weekly expenditure (£471).

This is a figure dwarfed by the average Aviva critical illness payout of £78,707.

The insurer has warned that most Britons are unprepared for catastrophe, with only 37% possessing life or critical illness coverage.

Fifty-nine percent of Britons consider it the individual’s responsibility to cover any drop in income, but 17% believe it is the government’s responsibility with 9% expecting loss in earnings due to illness or death be covered by the employer.

Aviva’s Louise Colley has said that proper coverage can help alleviate money worries during a tragedy such as critical illness or death, and has encouraged households to take up life and critical illness coverage.

The life and pensions provider observes: “As the economic instability remains in the UK the security offered by this kind of product is becoming ever more popular as consumers seek products that are flexible and that suit their long-term needs.”

In addition, the firm claims that family income benefit can be up to 59% cheaper than other types of cover.

For example, a 39-year-old non-smoking male with a mortgage of £150,000 over a 20-year term, would be paying a current monthly premium of £71.86 to receive the benefit as a lump sum in the event of death or critical illness.

Alternatively, if he opted to take out the full income plan for his family they would receive a monthly income totalling £7,500 a year for 20 years at a monthly premium of just £29.64 – a saving of £42.22.

The company’s head of marketing, Susan Barclay, comments: “Budgeting for the future involves creating a sensible financial plan, while not sacrificing valuable cover that may be vital in protecting a family in both the short and the long term.”

She adds: “Our family income benefit plan will provide a steady income to pay any remaining mortgage, and provide a family with the finances they need to help create a clear budgeting plan for the future.”

The move should reduce costs because customers can consolidate all their protection needs into one plan, rather than using separate providers for different types of cover.

It also makes the application and underwriting process quicker and easier, for both advisers and customers.

The new scheme offers a variety of benefits (both personal and business) including life, critical illness, life with critical illness, family income benefit and so on.

Discounts increase in line with the number of benefits taken out under the one plan, ranging from £2.40 a month for two benefits to £9.60 a month for five benefits.

The group’s head of proposition – protection and investments, Stephen Crosbie, comments: “It’s important that people protect their families and businesses with the right mix of income protection and critical illness cover … these discounts enable advisers to make a full range of protection cover more affordable for their clients.”

“Here to help at every step” aims to ensure the correct level of cover is provided and that claims are paid out swiftly.

The guide covers application and underwriting processes, emphasising the importance of disclosing accurate personal information at the outset, and during the claims process.

It also answers a series of commonly asked questions such as the type of information that will be requested during the application process.

The guide then takes customers through the claims process so they understand the information needed to progress a claim and its likely duration.

Zurich’s protection management director, Peter Hamilton, believes it is vital customers know exactly what is required from them because making a claim associated with a critical illness, long-term sickness or bereavement can be distressing.

Last month, Zurich UK Life released critical illness figures which showed a 28% rise in the total number of claims paid out between 2005 and 2009.

Last year, the number of critical illness claims paid rose for the fourth consecutive year to 814, while the number of claims declined remained static compared to 2008, at 9%.

Of those declined, 8% were thrown out because the definition of the condition wasn’t met and 1% because of non disclosure.

ELSA was set up in 2009 with the aim of promoting the development and reputation of the life settlement industry and now represents over 11 members across the sector.

According to the trade body, life settlement-backed investments (which turn life insurance policies into tradable assets) are an asset class that has expanded rapidly as a result of the financial crisis.

Investors looking for predictable returns that are not linked to the broader market cycle have been attracted by their lack of stock, bond or property exposure.

However, ACLI is arguing that allowing life settlements to be packaged into securities increases the risk of fraudulent policy applications.

ELSA “vigorously challenges” the claim, pointing to a growing understanding of the asset class being exhibited by financial intermediaries, institutions, discretionary wealth managers, and high net worth investors.

ELSA joint chairman, Patrick McAdams, comments: “It is absurd to suggest that all life settlements securitisation should be banned … you would never dream of suggesting other big-ticket purchases such as a house should not be transferable, so why a life insurance policy that is no longer wanted or has simply become unaffordable?”

He adds: “The financial crisis has underlined the need for investments that provide better diversification … life settlements have an important role to play in achieving this end as the growing interest in the asset class will testify.”

The price comparison website estimates that one or more illnesses are excluded in around 15% of critical illness and income protection applications.

In such cases, the extent of the policy is reduced but not necessarily the premium.

According to the firm, not every insurer will reduce costs, although some have now taken a stand and agreed to make premium cuts.

The firm urges consumers to remember that if they take out a policy and a significant exclusion, such as Cancer, is added, there are insurers who will treat them fairly.

LifeSearch senior policy adviser, Matt Morris, says: “If they refuse, speak to an independent adviser who can find you an insurer that will.”

He adds: “Remember that the way to avoid exclusions – other than the general ones, such as war and suicide – in the first place is to take out a policy while you are still healthy. Don’t wait until disaster strikes.”

The failed mutual said it was pleased to announce that, with immediate effect, it has reintroduced interim bonuses and reversed the reduction in policy values made in March 2009 as follows:-

An interim bonus of 3.5% has been awarded to UK with-profits pension policies; in addition, policy values of UK with-profits pension policies have been awarded a one-off increase of 2%, reversing the reductions made on 1st March 2009.

The corresponding figures for UK life policies are 2.8% for interim bonus and a one-off increase to policy values of 1.6%.

Equitable Life chief executive, Chris Wiscarson, says: “The Society is determined to recreate value for policyholders and these increases in policy values are small but important steps along this road.”

The life and pensions provider came close to collapse in 2000 when it could not deliver the returns it had promised.

At the time, over one million savers lost up to 50% of the value of their pension funds.

The issue of compensation was eventually given over to the Parliamentary Ombudsman, Ann Abraham, whose report accused regulators of comprehensive failures and the Government of maladministration.

It also recommended the establishment of a scheme to consider individual claims for compensation.

Early last year, the Government published details of such a scheme, which allowed awards on a hardship basis and therefore left the bulk of Equitable policyholders out in the cold.

Policyholder have since successful in a judicial review of the Government’s decision not to implement the Ombudsman’s recommendations in full and ministers are in the process of reviewing proposals for the compensation scheme.

According to the ABI, the average claim stood at £52,000 or double the average UK annual salary.

In addition, the number of critical illness claims paid out rose to 90% in 2008, compared with 80% in 2005, and for life term assurance, 97% of claims were paid last year.

The ABI believes its new Code of Practice has led to less claims being declined due to non-disclosure and says it is now working with its members to tackle the number of claims declined because they don’t meet the definition of “Total Permanent Disability”.

The ABI’s director general, Nick Starling, comments: “The insurance industry pays out £5.9 million every day in life and critical illness insurance claims, making a real difference to people’s lives at the most difficult of times.

He adds: “The new ABI code is making a dramatic improvement to the number of critical illness claims we pay.”

The ABI has also been working with the Law Commission which is reviewing an aspect of insurance contract law that has resulted in huge numbers of claims being rejected over the years.

Under the Marine Insurance Act 1906, the consumer has a duty of disclosure when completing an insurance proposal form.

Currently policyholders answer the questions asked by their insurance company but are expected to disclose any other facts that may be relevant to the insurer, without necessarily knowing what factors the insurer will take into account when accepting a risk.

The broker is extending its “Unique” offering, which specialises in cover for people with pre-existing medical conditions, their families, carers and supporters.

In what the firm claims to be an industry first, Unique has arranged for autism to be treated as a disability as opposed to a medical condition, which will significantly reduce the cost of cover in many cases.

The brand’s associate director, Diane Caplehorn, comments: “Our travel cover is particularly innovative as we can class autism as a disability – which has not been negotiated in the market before.”

NAS membership and branches manager, Samantha Fletcher, adds: “We often hear from our members that arranging appropriate cover is difficult … Unique are leading the way in terms of insurance provision and we hope the rest of the industry will follow.”

Last week, Heath Lambert announced that it will be the sole provider of cover for the redesigned female orientated Diamond home insurance product.

Included within the policy will be Handbag Cover, Home Emergency Cover, Keycare and Legal Protection, plus an option for interest free instalments.