Full of holes: A number of insurance professionals say DeadHappy’s proposal is more full of holes than Swiss cheese
If you were to rate it on the creativity and impulsiveness of its marketing, you’d probably give it a ten out of ten.
But DeadHappy’s bold attempt to get people to think about life coverage in a positive way scores lower when it comes to the certainty and comprehensiveness of its products.
Contacted by The Mail on Sunday, a number of protection insurance specialists said the new insurer’s offering was more riddled with holes than Swiss cheese.
They fear that the proceeds may not be paid immediately after the death of a loved one – and may attract a dreaded inheritance tax.
Nor are buyers protected from the ravages of annual premium increases, which can rise faster than inflation. No critical illness insurance is offered – traditionally provided with life insurance in one plan.
If that wasn’t enough, DeadHappy won’t win the Plain English award when it comes to explaining how the policy works.
Launched in February of this year, DeadHappy promises to revolutionize the way cover life is sold and bite into the eight million adults who are currently living without it.
Designed to appeal to younger buyers, it allows customers to obtain cover online and prompts them to leave “death wishes” stating how they would like any offsets to be used.
Suggestions range from the rational—paying off the mortgage—to the self-indulgent (a bronze statue being commissioned in your honor) and the outlandish (urging mourners to dress in Star Wars attire).
It’s unorthodox — and a little refreshing — compared to the staid way most life insurance companies do business. But death wishes are only part of the jigsaw. The wrap that Dead-Happy sells is also funky.
Usually, life cover is sold for an agreed term (say 20 or 25 years) and a fixed premium, which the insurance company can’t raise. If the policyholder dies during the term, the originally insured amount is paid, as long as the customer did not conceal any major health problems when taking cover (for example, a history of alcohol abuse).
If you were to rate it on the creativity and impulsiveness of its marketing, you’d probably give it a ten out of ten. But DeadHappy’s presentation scores lower for certainty and comprehensiveness
DeadHappy insurance works differently. Coverage is initially for ten years, but monthly premiums are only fixed for a year. After every 12 months, they are reset. The company says the average rise will be 5 percent, and no more than 8 percent.
For most customers, the cover will be extended annually—so the policy is actually a ten-year rolling plan. But if someone’s health worsens, that may not be the case.
So if they are diagnosed with cancer at any time after taking the cap off, when they come in to renew their policy, they are only guaranteed for another nine years.
Most live-action winners seek to secure a longer life so that their dependents can pay off a typical 25-year mortgage. But Dead-Happy argues that if cancer doesn’t kill the policyholder in five to seven years, it is very unlikely that it will kill them at all.
Andy Nutt, CEO of Dead Happy and co-founder and chairman Phil Zeidler, taken from the company’s website
DeadHappy founder Phil Zeidler insists its coverage is more customer-focused and fairer, with premiums based on current death risk, rather than death risk in the next 20 to 25 years.
As a result, buyers in their 20s who are otherwise healthy will find the cap cheaper than elsewhere – see below – because their chances of dying are low.
Last week, Zeidler told The Mail on Sunday: “Our view is that life insurance is a broken product. People are routinely sold with policies that they overpay for, only to have them voided when personal circumstances change. With us, the cover is tailored to the immediate need.”
Tom Conner, director of financial advisor Drewberry Insurance, says: “Its clever marketing will catch the eye of those who are bored – or uninterested – with life insurance.
But a ten-year coverage where the price can change every year is not good for long-term needs such as a mortgage or a young family. It transfers risk from the insurance company to the customer.
Alan Lakey, Protection Specialist with Highclere Financial Services, welcomes DeadHappy’s challenge to the ‘dry’ insurance sector and its appeal to a younger audience. But he is “displeased” that the cover cannot be written on a trust, ensuring that any compensation falls outside the estate of the deceased and the inheritance tax system.
Soon, Zeidler said, customers will be allowed to write policies honestly. To date, he has sold about 1,000 plans.
Young people will be better off buying income protection, says Johnny Timpson, insurance expert at Scottish Widows.
“Statistically, being unable to work due to accident, illness, or disability is a greater risk to finances than death, and makes more sense if you have no dependents or a mortgage,” he adds.
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