Mortgage Protection Menu - Accelerated CI
Provider: Progress from Royal Liver
Product: Mortgage protection menu - accelerated critical illness (CI). The plan is the UK's first online-only protection service and is available through selected distribution partners. It is designed to help dependants repay an outstanding mortgage or provide additional protection on:
• Death
• Terminal illness
• Critical illness
• Total permanent disability
The plan also aims to top up income if:
• A child is diagnosed with a listed critical illness.
• The life assured is unable to work or maintain a houseperson's role due to disability.
• The life assured becomes unemployed.
• The life assured takes time off work to care for a sick child resulting in lost earnings.
The plan is flexible enough to permit changes in the level and type of cover at any time by adding or removing benefits.
Maximum acceptable age at commencement: The maximum age attained at entry is 59.
Maximum expiry age: The maximum age attained at expiry is 65.
Maximum term: The maximum term is 40 years.
Maximum sum assured: The maximum sum assured, where CI is included, is £500,000.
Minimum acceptable monthly premium: The minimum premium is £7.50 per month or £75 per year.
Monthly policy fee: The service/policy fee is £2.50 per month. The fee is fixed for the term of the plan.
Life cover offered as an option: Life cover is automatically included as CI cover is an acceleration of the life assurance benefit except where added to income protection (IP) cover.
Level CI benefit: The plan can be arranged with combined level term and CI.
Decreasing CI benefit: The plan can be arranged with combined decreasing term and CI. Benefits will decrease in line with an assumed mortgage interest rate of 7%, 9%, 12% or 15% selected by the proposer at the outset.
Waiver of premium available: Waiver of premium is available as an option when a benefit is added to the plan. Waiver is integral to IP.
Standard definitions of disability: Own occupation for those individuals deemed to be in occupation classes one and two. Own and suited occupation for those individuals deemed to be in occupation class three. Activities of Daily Working (ADW) for occupation class four and housepersons. Claims will be payable if a customer meets the criteria of three out of nine ADWs. The deferred period is 13 or 26 weeks.
Own occupation: Incapacity means that the life insured must be totally incapacitated. On or before the life insured's 60th birthday, total incapacity shall mean that due to illness or injury the insured is unable to perform the material and substantial duties of their own occupation. Permanent inability will be measured by inability that will persist for the longer of five years and the period from the claim to age 60.
The injury or illness must have prevented the life insured from working for at least six months before a claim can be submitted. Except if the life insured is not in employment immediately prior to incapacity, then total incapacity shall mean that due to illness or injury, routinely and not exceptionally, the life insured meets three or more of the ADWs of the plan.
After the life insured's 60th birthday total incapacity shall mean that there are at least three ADWs the insured is unable to perform without the assistance of another person.
Waiver benefit covers both lives: Two single life waiver of premium benefits can be linked to each of the benefits in a joint life plan. In this case the premium rate for each waiver benefit will be reduced to reflect a joint life waiver discount.
Does the plan offer IP as a rider benefit: IP cover is available and its inclusion is not dependent on any other benefits being included. The benefit can be set up on either a guaranteed or reviewable premium rate basis. It is possible to include additional CI cover with this benefit.
Maximum allowable IP benefit: The lesser of £125,000 and 50% - annual income plus selected P11d benefits - (other and continuing income). Benefit will continue to age 65. Deferred periods of four, eight, 13, 26 or 52 weeks are available. For occupation class four and houseperson's, the deferred period is restricted to 13, 26 or 52 weeks. The default definition of disability is own occupation.
Unemployment cover option: Yes, with IP benefit only.
Does the plan offer the option to buy-back life cover after a claim: This option is only available at commencement subject to underwriting. It entitles the life assured to take out a new plan for life cover, without further underwriting, 12 months after payment of a CI or total and permanent disability claim (TPD) under level term with earlier CI cover or decreasing term with earlier CI cover.
If the original plan was written on a single life basis then the new plan will be on a single life basis. If the original plan was written on a joint life basis then the new plan will be on a joint life basis, except:
• If the life assured that has suffered the critical illness has died within the 12 month period then the remaining life assured can effect a new plan on a single life basis, subject to completing a declaration of health.
• If the life assured that has not suffered the critical illness has died within the 12 month period then the remaining life can effect a new plan on a single life basis with no further underwriting.
The insured will be eligible to effect the option provided they survive for 12 months after the date that a CI or TPD claim is paid. The option must be exercised no later than 13 months after the date a CI or TPD claim is paid.
The new plan will:
• Have a sum assured no greater than the sum assured on the original plan at time of claim.
• Have an expiry date no later than the expiry date under the original plan.
• Not include escalation, even if the original plan included escalation.
• Be issued on the same mortgage interest rate as the original plan, if the original plan was combined decreasing term and CI cover.
• Not include any guaranteed insurability options (GIO).
• Not include any waiver of premium benefit.
The premiums payable for the new life plan will be based on premium rates applicable at the time the new cover starts, based on the insured's age at that time and the term to the expiry date of the new plan.
Increase term after start date other than by insurability: The term can be increased or decreased subject to a maximum overall of 40 years and underwriting. An increase in term will be processed by a recalculation of the whole benefit premium based on the then current age, outstanding term and premium rates.
Increase sum assured subject to underwriting: Yes
• Level cover: The premium will only be calculated for the increase in sum assured and will be processed as a new plan for the top-up.
• Decreasing cover: Any increase will result in a recalculation of the entire benefit premium based on the then current age, outstanding term and premium rates. The change will be processed as a new plan for top up.
• Change lives assured after start date: A change in the life assured configuration will result in a recalculation of the entire benefit premium based on the ten current age, outstanding term and premium rates.
Joint life first claim basis available: Yes
Joint life with 2x cover basis available: Yes
Automatic sum assured indexation available: Benefit escalation can be included where the case has been accepted on standard terms. Escalation can be added at any time.
Where included, the sum assured will increase in line with the declared value of RPI, capped at 10%, for the year ending two months before the plan anniversary. The premium will increase in line with the increase in the sum assured, based on the original premium rates multiplied by a factor determined at outset.
Basis on which indexation increases are costed: In line with the increase in the sum assured, based on the original premium rates multiplied by a factor determined at outset.
Guaranteed insurability option: This option entitles the insured to increase their level of cover on the occurrence of a special event:
• Marriage
• The birth of a child
• The legal adoption of a minor or minors
Or on the occurence of a mortgage event:
• Purchasing a new house or increasing the total amount borrowed on their mortgage due to home improvements.
GIOs are available where the lives assured are accepted at ordinary rates.
Reviewable rates: Where CI cover is included, the premium rates are guaranteed for the first five years of the plan and reviewable annually on the policy anniversary thereafter.
Number of core critical conditions as defined by ABI/IFAA: Cancer, coronary artery bypass surgery, heart attack, kidney failure, major organ transplant, multiple sclerosis, stroke.
Number of ABI/IFAA additional conditions covered: Aorta graft surgery, benign brain tumour, blindness,coma, deafness, heart valve replacement or repair, loss of limb, loss of speech, motor neurone disease, paralysis/paraplegia, Parkinson's disease, terminal illness, third degree burns.
Number of other conditions covered: AIDS through assault, AIDS blood transfusion, AIDS occupation, Alzheimer's disease aplastic anaemia, children's benefit, Creutzfeldt-Jakob disease, emphysema, liver failure, loss of independence, major head trauma, mastectomy, pre-senile dementia, severe lung disease.
Number of TPD definitions available: Three
