Self Assurance mortgage and term personal
Overview: A menu product from which policyholders can pick the following:
Life protection
Critical illness (CI) protection
Life with CI protection
Family income benefit (FIB)
CI FIB
Life with CI FIB
Lifetime protection
Gift inter vivos
Income protection (IP)
Maximum sum assured where accelerated CI is included:
£500,000
CI cover as a % of life cover: The accelerated CI cover can be equal to the life cover or less.
Additional CI benefit: Standalone CI is available.
Renewable rate option under the plan: Death benefit, CI benefit and IP benefit can be arranged on a five or 10-year renewable basis.
Automatic sum assured indexation available: Benefit will increase each year by the rise in the RPI. However it will not increase by more than 10% each year. The premium for that benefit will increase by the increase in the RPI multiplied by 1.4. Benefit will increase on the policy anniversary after cover starts. For benefits added or increased during the year, the first increase will apply less than a year from it starting and then each year after this. Scottish Provident will work out the increase in the RPI over the year ending three months before the policy anniversary. If the rate of inflation drops below zero, the rate will be zero.
Plan available on a life of another basis: Yes
Waiver of premium available: Premium payment benefit (sickness, accident or disability). Own occupation - the policyholder must be unable to do their own occupation because of sickness, an accident or disability.
If the policyholder is a house person, not in paid work at the time of claim, or is told when the policy is taken out that 'own occupation' definition cannot be offered, the policyholder must be unable to do two of the following six work tasks, or suffer from mental incapacity:
Walking
Lifting
Using a pen, pencil or keyboard
Hearing
Speech (cannot be understood in a quiet room)
Vision (cannot, even when wearing glasses, see well enough to read 16 point print)
If the policyholder is over 65 when a claim occurs, they must be unable to do three of the following six life tasks, or suffer from mental incapacity:
Washing
Dressing
Transferring (for example, moving from a bed to an upright chair)
Mobility (for example, moving from one room to another in their own house)
Continence
Feeding
If the plan has renewable benefit and premium payment benefit is being claimed at the time of renewal, premium payment benefit will be continued to be paid.
Waiver benefit covers both lives: Yes
Plan allows inclusion of IP benefit: Yes
Does the plan offer the option to buy back life cover after a claim? When the life assured selects death or earlier CI benefit or CI benefit with definition A, B or C, they can select the buy-back option. This allows the life assured to take out additional CI cover when they make a critical illness or total permanent disability (TDD) claim and the claim is accepted. The life assured must be under age 60 when they make the claim to effect this option.
If the claim was for cancer, the life assured can set up the buy-back benefit 12 months after they have been discharged from successful treatment with no subsequent recurrence. This option must be taken up within five years of the claim.
Guaranteed insurability option: Increase events for term, personal and mortgage plans only.
Mortgage increase: This can be used when the mortgage amount increases because of moving house or making home improvements. The increase must be for the policyholder's home/principal private residence and the policyholder must not currently be in arrears. Scottish Provident will limit the policyholder's increase to the lower of the increase in his/her mortgage and the limits shown above. Scottish Provident will need a copy of the loan offer as evidence. For unemployment benefit, the policyholder can use only the mortgage increase option to increase this benefit.
Childbirth or adoption: Policyholders can increase their benefit by any amount within the limits shown above. Scottish Provident will need a copy of the birth or adoption certificate as evidence.
Marriage: Policyholders can increase their benefit by any amount within the limits shown above. Scottish Provident will need a copy of the marriage certificate as evidence.
Salary increase: If a policyholder gets promoted or moves to another job and as a result of this their salary increases, they can increase the benefit by the percentage difference between their new and old salary. However, the increase must be at least 10%. Scottish Provident will need written confirmation from the policyholder's employer or the UK Inland Revenue (or equivalent body) as evidence. Policyholders cannot make an increase using this option if they are self-employed, a controlling director, or if they can decide on the amount of their salary.
Joint life separation: Yes
Number of core critical conditions as defined by ABI/IFAA: Seven
Number of core definitions that exceed ABI model: Two
Number of ABI/IFAA additional conditions covered: 13
Number of additional definitions that exceed ABI model: Five
Number of other conditions covered: Nine
Number of TPD definitions available: Three
Other benefits: Additional benefits for disability income benefit (sickness, accident or disability).
The following two additional benefits will automatically be added to the plan if policyholders are covered for: death or earlier CI benefit or CI benefit (cover type A, B or C only) for a total benefit amount of at least £25,000; and disability income benefit.
Immediate cash benefit
The immediate cash benefit amount will be equal to the weekly equivalent value of a policyholder's disability income benefit multiplied by the deferred period under his or her plan (subject to a maximum payment of 26 weeks equivalent disability income benefit). The benefit will be paid as a lump sum. Scottish Provident will pay this benefit if the policyholder make a CI claim under death or earlier CI benefit or CI benefit and we accept the claim. Once a payment has been made, immediate cash benefit will cease.
Children's income benefit
Scottish Provident will cover all a policyholder's children for children's income benefit, including stepchildren and children who have been legally adopted, aged between 30 days and 18 years. The benefit amount will be for 25% of the disability income benefit in force at the date of notification of a claim for children's income benefit. However, Scottish Provident will not pay more than £5,000 per year, per claim over all policies with us. The benefit will be paid as an income for a specified period if the child survives for 14 days after satisfying our definition of one of the critical illnesses or disabilities.
Policyholders' children will be covered for the critical illnesses and disabilities listed (except loss of independent existence). Also, a different definition of TPD is used for children's income benefit. Scottish Provident will pay this benefit until the first of the following events happen:
The date the child reaches age 18
Three months after the death of the child
Five years after the benefit starts
The end of the benefit term or earlier cancellation of benefit
Any claim made under immediate cash benefit or children's income benefit will not affect the amount of main benefits.
Number of exclusions applicable to CI: One
Analyst's comment
The menu protection concept pioneered by Scottish Provident has now become standard practice for new plans arriving on the market.
Self Assurance is a comprehensive protection plan offering flexibility of construction, and allows the inclusion of life cover, life or earlier CI cover, CI cover, IP, hospital cash, unemployment benefit and waiver of premium.
The inclusion of hospital cash benefit is one of the most interesting features of the plan and signifies that the incorporation of an element of primary medical expenses cover within a menu is attractive to the consumer.
The CI cover offers protection for 29 conditions. A number of the ABI 'defined' core and additional covers exceed the scope of the current model wordings, and as the market embraces the latest recommendations from the ABI it will be interesting to see if Scottish Provident continues to provide extended cover.
As with many menu plans, the flexibility of Self Assurance continues throughout the term, allowing benefits to be added and removed and the levels of cover to be varied. Not only does this enable the plan to cope with changing needs but, more importantly, it allows it without the administrative nightmares of multiple proposals, underwriting delays and direct debit payments.
In spite of its maturity, Self Assurance continues to offer one of the most extensive protection solutions. In a market where many buying decisions are driven by price, the true value of the menu model is the role it plays in encouraging a holistic approach to protection advice.
Nick Telfer, head of life and protection, Defaqto
