Main Benefits - Life protection (guaranteed) - Critical illness (CI) protection (guaranteed and ...
Main Benefits
- Life protection (guaranteed)
- Critical illness (CI) protection (guaranteed and reviewable)
- Life with CI protection (reviewable and guaranteed)
- Family income benefit (guaranteed)
- Family income benefit CI protection (reviewable)
- Family income benefit life with CI protection (reviewable)
- Lifetime protection (No longer available)
- Gift inter vivos (guaranteed)
- Income protection (IP) (guaranteed or reviewable)
- Minimum acceptable age attained at commencement for insured: 18
- Maximum age at commencement for accelerated CI: 59 for guaranteed rates and 74 for reviewable rates
- Maximum expiry age for accelerated CI: 64 for guaranteed rates and 84 for reviewable rates
- Maximum sum assured where accelerated CI is included: £3 million
- CI cover as a % of life cover: Accelerated CI benefit is always 100% of the associated life cover. Extra life cover can be selected from the menu plan
- Additional CI cover: Available on a stand-alone basis as part of the menu of options
- Number of years before the first premium review: Five years
- Premium term less than policy term: All premiums are payable throughout the full benefit term.
- Automatic sum assured indexation available
If life protection, CI protection, life with CI protection where premiums are not current costed, or key person or executive IP are chosen, then the life assured can select the indexation option. This option will help protect the benefit amount against the effects of inflation. The benefit and premium will increase each year in line with the increase in the Retail Prices Index (RPI), subject to a maximum of 10%. Scottish Equitable will calculate the increase in the RPI over the 12-month period from the latest rate published three months before the benefit anniversary.
Indexation costing basis
The benefit amount and premiums escalate at the same percentage rate if indexation is chosen. Therefore, the increases are based upon the life assured's age at outset.
Keyperson plan: Available under the Personal Protection section of the menu.
Partnership protection plan: Available under Personal Protection & Business Protection.
Split trust wording: Available as part of the flexible trust deed
Plans available to UK expatriates: None
Plans available to foreign nationals resident in UK: Yes
Waiver of premium available: Can only be selected at outset
Plan allows inclusion of IP benefit: Available as an option on the menu of products
Option to include accident sickness and unemployment cover: No
Plan offers CI buyback option after a claim: No
Option to vary the cover after start date other than by guaranteed insurability options (GIO)
The following changes can be made at any time subject to underwriting:
- Increase the benefit amount
- Reduce the benefit amount
- Extend the benefit term
- Reduce the benefit term
- Add a main benefit
- Remove a main benefit
- Add an additional benefit
- Remove an additional benefit
- Add a life assured
- Remove a life assured
- Change the payment frequency
- Change the deferred period
- Change the definition of disability/incapacity.
GIO
Options are available when entering marriage or civil partnership;
adopting a child;
extending, improving or moving home;
at promotion or when changing career;
a key person's/partner's value, a director's interest or a business loan increases; and when there is an increase in net relevant earnings or a business loan for a sole trader.
The GIO cover increases in Inheritance Tax (IHT) liability due to legislative changes and is available where gift inter vivos is selected.
The benefit amount can be increased by 50% up to a maximum of £150,000 for cash sum benefits and £10,000 a year for income benefits.
All GIO include life, life and CI and CI cover. The policyholder must have at least five years left on the original benefit term when using these options.
Own doctor medical available: Yes
Paramedical examination available: Yes
Plan includes a counselling service: Yes
Number of critical illnesses covered: 36 including 23 ABI defined conditions and 13 others:
Alzheimer's disease - resulting in permanent symptoms.
Aorta graft surgery - for disease or traumatic injury.
Aplastic anaemia - with permanent bone marrow failure.
Bacterial meningitis - resulting in permanent symptoms.
Benign brain tumour - resulting in permanent symptoms.
Blindness - permanent and irreversible.
Cancer - excluding less advanced cases.
Cardiomyopathy - of specified severity.
Coma - resulting in permanent symptoms.
Coronary artery bypass grafts - with surgery to divide the breastbone.
Creutzfeldt-Jakob disease (CJD) - resulting in permanent symptoms.
Deafness - permanent and irreversible.
Dementia - resulting in permanent symptoms.
Encephalitis - resulting in permanent symptoms.
Heart attack - of specified severity.
Heart valve replacement or repair - with surgery to divide the breastbone.
HIV infection - caught in the UK, Channel Islands or Isle of Man, from a blood transfusion, a physical assault or at work in an eligible occupation.
Kidney failure - requiring dialysis.
Liver failure - advanced stage.
Loss of hands or feet - permanent physical severance.
Loss of speech - permanent and irreversible
Major organ transplant.
Motor neurone disease - resulting in permanent symptoms.
Multiple sclerosis - with persisting symptoms.
Open heart surgery - with surgery to divide the breastbone.
Paralysis of limbs - total and irreversible.
Parkinson's disease - resulting in permanent symptoms.
Primary pulmonary hypertension - of specified severity.
Progressive supranuclear palsy - resulting in permanent symptoms.
Respiratory failure - of advanced stage.
Rheumatoid arthritis - chronic and severe.
Stroke - resulting in permanent symptoms.
Systemic lupus erythematosus - with severe complications.
Terminal illness.
Third-degree burns - covering 20% of the body's surface area 50% of the face.
Traumatic head injury - resulting in permanent symptoms.
Children's cover
If the life assured chooses CI protection, life with CI protection, CI family income benefit or life with CI family income benefit, all their natural and legally adopted children will be covered for children's CI protection between the age of 30 days and their 18th birthday.
There are 36 children's critical illness conditions covered.
Child maximum benefit
If the child is diagnosed with one of the conditions listed and lives beyond the 14-day survival period, Aegon will pay 50% of the benefit amount at the time of the claim, up to a maximum of £20,000. This benefit is always paid as a cash sum.
Basis for inclusion of Total and Permanent Disability Available on a stand-alone basis and with life protection, CI protection, life with critical IP, family income benefit, CI family income benefit, life with CI family income benefit and lifetime protection.
Number of total permanent disability definitions available: Four
Survival period for CI claims: 14 days starting from the date when the critical illness is diagnosed.
Number of ABI exclusions: One; a claim will not be paid if it results from or is directly related to alcohol or drug abuse. The alcohol or drug abuse exclusion applies only to cardiomyopathy, coma, liver failure and Parkinson's disease.
Number of other exclusions: One other; suicide. Pre- existing conditions are also excluded in relation to child cover.
ANALYST'S COMMENT
In July, Aegon made some significant improvements to the CI element of its Personal Protection plan.
Five new critical illnesses were added bringing the total to 36. This move will appeal to IFAs that judge the quality of a CI policy by the number of critical conditions covered. rheumatoid arthritis offers the best value; 0.8% of the UK population is affected by this condition and only three other providers cover it. However, encephalitis and system lupus are rare conditions; primary pulmonary hypertension is extremely rare; and open heart surgery is an extension of the cover afforded by the coronary artery bypass and aorta graft surgery definitions.
The definitions of three conditions - coma, heart attack and third degree burns - have been improved to ABI+ status. For third degree burns, cover has been extended to cover 50% of the face in addition to the standard 20% of the body. This is a real improvement where burns to the face are generally accepted to be more disfiguring and debilitating.
The removal of three standard exclusions - unreasonable failure to follow medical advice, war and civil commotion, and traveling and living abroad - is a welcome move. The failure to follow medical advice exclusion has always been contentious.
Aegon has also introduced a customer helpline and increased the maximum term for guaranteed rates for CI to 40 years. Claimants can now also gain medical evidence from one of a number of designated countries outside the UK.
The Protection Plan is a flexible menu proposition incorporating all the main protection covers and offering reviewable and guaranteed rates. These latest changes have further improved Aegon's relative position against its competitors.
Ben Heffer, Principal consultant, life and protection, Defaqto.
