Overview: The plan is a regular premium, non-qualifying, non-profit whole of life (WOL) plan designe...
Overview: The plan is a regular premium, non-qualifying, non-profit whole of life (WOL) plan designed to provide a guaranteed sum assured on the death of the life assured. It is available on a single life, own life basis; a single life, life of another basis; joint life, first death basis; joint life, second death basis and joint life, life of another basis.
Minimum acceptable age at commencement: This plan is available to all UK residents (excluding residents of the Channel Islands and Isle of Man) between the age of 18 next birthday and 85 next birthday.
Maximum sum assured: No
Minimum acceptable monthly premium: £5 per month
Limited premium payment term available: No
Minimum acceptable single premium: No
Acceptable premium frequencies: Monthly premiums are payable throughout the term of the policy by direct debit only.
Low start version: No
Monthly policy fee: The premium is guaranteed throughout the policy term and is calculated at outset. It will take account of a fixed monthly plan fee of £2.
Increase sum assured subject to underwriting: Yes. The following principles have been agreed:
- For increases in sum assured (other than automatic increases which are explained in Section 4.5), the increase in premium is based on the rate that applies at the time for the insured's age(s), health and smoker status. The base premium is unaffected. The increase in cover will be written as a new cover under the same policy.
- For reductions in sum assured, the premium for that cover will be reduced in proportion (with an appropriate adjustment for plan fee). For example, it will not be based on the life assured(s) age(s) at the date of the change.
Decrease sum assured subject to underwriting: Yes
Change lives assured after start date: No
Waiver of premium (WOP) available: Where WOP benefit is selected the premiums will be waived if the life assured has been incapacitated longer than the deferred period selected. The same definitions of incapacity (including special definitions for certain occupations and for cover after age 65) will be applied as for mortgage payment protection benefit under the Flexible Protection Plan (MIMI). WOP cover will stop when the life assured reaches age 65 or 85 (depending on the option selected at outset). If WOP is taken out and the plan altered, Liverpool Victoria will normally extend waiver to cover the new plan premium. However, Liverpool Victoria reserves the right to decline waiver on any increased or altered cover if the life assured's health has deteriorated in the meantime.
Waiver definition of disability: Where waiver of premium benefit is selected the premiums will be waived if the life assured has been incapacitated longer than the deferred period selected.
Definition of incapacity: Up to age 65. Incapacitated means that because of sickness or accident the life assured is totally unable to carry out the essential duties of his or her normal occupation and is not doing any other work. Essential duties are those that cannot reasonably be omitted without affecting the ability to carry out the life assured's normal occupation. If the life assured is unemployed at the start of a period of incapacity, then by incapacity we mean that because of sickness or accident he or she is unable to go out of doors without help.
Waiver benefit covers both lives: Two lives covered under the plan may each select WOP cover and may also select different deferred periods. In this case, the total plan premium will be waived if either life qualifies for benefit. However, if both lives qualify for benefit, premiums are only waived once and no additional benefit is paid.
Sum assured indexation in line with RPI: Where index-linked benefit is selected, both the sum assured and the premium will automatically increase on each plan anniversary in the same proportion as the increase in the RPI over a 12-month period ending three months prior to the plan anniversary.
Guaranteed insurability options (GIOs): The following options will be included automatically at no additional cost, unless declined by the underwriter on a particular life.
Increase options: The option exists to increase sum assured without underwriting in the events listed below. The option can be invoked on more than one event, but the total increase under all guaranteed insurability options is limited to the lower of 50% of the benefit shown on the policy at inception or £250,000.
If the life insured is incapacitated at the time, or if a claim for waiver of premium benefits is being paid, then waiver will not apply to the increase in cover. The events on which an increase option may be taken are detailed below:
Marriage/civil partnership: Maximum increase of the lower of £50,000 or 50% of the benefit shown on the policy at inception, subject to maximum per plan above. Option must be exercised before age 56 and must be applied for within three months after the event.
Inheritance: The increase is restricted to the lower of the value of the increase in Inheritance Tax liability resulting from the gift, or £50,000 or 50% of the benefit shown on the policy at inception, subject to the maximum per plan above. Option must be exercised before age 65. This option may only be exercised once and must be applied for within three months of receipt of the gift or inheritance.
Childbirth/legal adoption of a child: On the birth/legal adoption of a child, the sum assured may be increased by up to 50% of the original sum assured, subject to a maximum total increase of £150,000 in respect of this option.
Increase of mortgage: On mortgage increase, the increase in existing cover is further limited to the lower of the amount of the mortgage increase or £150,000 or 50% of the benefit shown on the policy at inception, subject to maximum per plan above. Option must be exercised before age 56. This option must be applied for within three months of the increase in mortgage on moving house or home improvements.
Divorce/dissolution: If joint life cover, each life can take out a new policy before age 56 with each of the lives having maximum life cover of the same level of benefits and cover as on the joint life policy. In this case the existing plan is cancelled. The maximum sum assured on the new plans is based on the sum assured on the existing plan at the date of the divorce/dissolution. The two new policies will not have GIOs included, unless the original policy was a joint life last survivor policy, in which case the change in legislation GIO only will apply. This option must be applied for within three months from the receipt of the decree absolute or the dissolution document. The option to split a joint life plan into two single life plans is not available for LifeTime+.
Change in legislation governing inheritance or IHT rates: The option must be exercised within 12 months of the change taking effect. No age limit. The maximum increase will reflect the effect of the legislative change on the proportion of the estate covered immediately before the change.
Business protection increase option: The amount of the increase will be the lower of £100,000, the increase in the value of the life assured's interest in the business and the maximum per plan above. Option must be exercised before age 61 and within 3 months of the change in shareholding/partnership.
Critical illness benefit option: No
Terminal illness benefit option: No
Premium holiday option: Not available
Regular income facility available: Not available
Permanent total disability benefit option: Not available
Non smoker rates offered: Yes
Free cover during underwriting: The assured(s) will be covered for accidental death during underwriting subject to a maximum of the sum assured requested on application or £300,000, whichever is the lower. If death occurs notification must be received within three months of the event. Cover continues until one week after the date the application is accepted or rejected, or if earlier, the policy start date.
ANALYST'S COMMENT
With the majority of whole of life (WOL) plans being unit-linked, the absence of long-term premium guarantees will always be an issue. By combining guaranteed premiums with some of the flexibility normally associated with unit-linked plans, Liverpool Victoria's LifeTime+ should prove to be a winner.
As property values continue to rise, many more estates are becoming potentially liable to Inheritance Tax (IHT), and although IHT planning can be a complex area, the simplest and most effective route can be just to cover the tax bill. Unfortunately the choice of products available has diminished dramatically over the last decade as providers have focused attention towards other markets.
It is therefore pleasing to see that Liverpool Victoria has extended its protection range with the launch of LifeTime+, a non-profit WOL plan with guaranteed premium rates, targeted at the IHT protection market.
In terms of features, LifeTime+ compares well with other non-profit plans, particularly in terms of flexibility. It offers the facility to increase or decrease cover, subject to underwriting, together with an extensive range of guaranteed insurability options (GIOs).
The usual GIOs for marriage, childbirth and increase in mortgage are complimented by options to increase cover on legislative change, increase in value of business and receipt of an inheritance. The sum assured can also be linked to increase in line with the retail price index, although there is no option to choose a fixed percentage.
Uniquely, LifeTime+ offers a choice of deferred periods for waiver of premium from one, two, three or six months, together with the option to extend cover up to age 85.
