Overview: The protection menu is a menu-based protection product which offers: • Level life cover ...
Overview: The protection menu is a menu-based protection
product which offers:
• Level life cover
• Level life cover with accelerated critical illness (CI) cover
• Decreasing life cover
• Decreasing life cover with accelerated CI cover
• Family income cover
• Family income cover with accelerated CI cover
• Income protection (IP) cover with or without additional CI cover
The plan also aims to top-up income if:
• A child is diagnosed with a listed CI.
• 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.
Maximum age attained at commencement of insured for life
cover only: 79
Maximum age at commencement of insured for accelerated
CI: 59
Minimum policy term: Five years
Maximum expiry age: For life cover only, 85 years. For
accelerated CI, 65 years.
Maximum term: 40 years
Maximum sum assured where accelerated CI is included:
£500,000 – this includes any existing CI cover.
CI cover as a % of life cover: Where life assurance with CI cover is included, the CI cover acts as an accelerator of the life cover.
Guaranteed premium rates: Premium rates are guaranteed for the entire term where life cover only is included.
Reviewable premium rates: Premiums for the life with CI cover are guaranteed for five years then reviewable on the anniversary.
The reviews are based on Progress from Royal Liver's claims experience, industry experience and the impact of future medical advances.
They are not based on the health of the life assured.
Sum assured indexation in line with Retail Price Index (RPI): If chosen, the benefit of the main cover will increase in line with the declared value of the RPI up to the maximum allowed under the plan.
The benefit increase will never exceed 10%.
If the RPI is not published in any month, then the most recently published value will be used.
An increase may be declined no more than three times during the term of the cover.
If the planholder declines to proceed with three increases over the lifetime of the cover, then all benefit and premium escalation bases will be removed.
Plan available on a life of another basis: Yes Split trust wording available: Yes Monthly policy fee: There will only be one plan fee of £2.
50 per month or £25.
00 per year, regardless of how many covers are included within a single or joint life plan.
Waiver of premium (WOP) available: Yes.
13 or 26 weeks.
Age waiver cover ceases: The minimum age attained at entry is 16.
The maximum age attained at entry is 59.
The maximum age attained at expiry is 65 for WOP.
Does the plan offer an own occupation definition of disability: Own occupation for occupation classes one and two.
Royal Liver will pay a claim when the life assured is no longer able to perform the duties of their own occupation.
Does the plan offer an own or suited occupation definition: Own and suited for occupation class three.
Royal Liver will pay a claim when the life assured is no longer able to perform the duties of their own occupation, or an occupation to which they are suited by means of experience and education.
Waiver benefit covers both lives: Two single life WOP 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 Plan allows inclusion of IP benefit: Yes.
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.
Plans including option to include accident sickness and unemployment: Option to buy-back life cover after a claim.
The following can be added to the life with CI cover for an extra premium: Life buyback option (LBO) °Ù Providing that the LBO was selected at outset, it entitles the life assured to take out a new life cover, without further underwriting, 12 months after payment of a CI or total permanent disability (TPD) claim under level life and CI cover and decreasing life with CI cover.
• If the original life cover was written on a single life basis then the new life cover will be written on a single life basis.
• If the original life cover was written on a joint life basis then the new life cover will be written on a joint life basis.
• This option must be exercised no later than 13 months after the date a CI (or TPD) claim is paid.
Option to vary term after start date other than by insurability: The term of the plan 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.
Plan permits variations to sum assured other than GIO's: The sum assured may be increased subject to underwriting.
The sum assured can be decreased at any time.
Change lives assured after start date: A change in the life assured configuration (for instance, joint life to single life) will result in a recalculation of the entire benefit premium based on the current age, outstanding term and premium rates.
The change will be processed by the issue of a new plan.
Guaranteed insurability option (GIO): If the life assured is under age 55, has been accepted on standard rates and was in good health when the cover was originally underwritten, Royal Liver will include the following GIOs which will enable the planholder to increase the benefit amount at any time without any further underwriting on the occurrence of the following special events.
Career change or increase in salary: Maximum increase allowable is five times increase in salary or 50% of existing benefit to a maximum of £100,000 per year.
Marriage event: Maximum increase allowable is 50% of existing benefit to a maximum of £100,000 per year.
Childbirth / adoption event: Maximum increase allowable is 50% of existing benefit to a maximum of £100,000 per year.
Mortgage event: Purchase of a new property or increase in mortgage loan due to home improvements.
The maximum increase allowable at any one time is the lesser of: °Ù The increase in the mortgage loan amount.
• 50% of the existing benefit.
• £100,000 per year.
Joint life separation: This option can be used if the life assured and their partner have taken out the cover on a joint-life basis to cover a mortgage.
It allows the cover to be changed from joint life to two single life covers in the event of separation or divorce.
As a result, the mortgage is rearranged to be in the name of one planholder only, or either life assured takes out a new mortgage on a new property.
The new cover must be within three months of the mortgage being rearranged or taken out, whichever is appropriate.
Plans allowing income to be commuted to lump sum: There is an option to commute the sum assured to a lump sum at claim stage on death or diagnosis of a terminal illness or diagnosis of a critical illness of the life assured.
Number of ABI core conditions covered: 7 Number of ABI additional conditions covered: 13 Number of other conditions covered: 14 Childrens CI benefit: A lump sum benefit for the lesser of £25,000 or 50% of the current CI benefit will become payable if natural or legally adopted child (between the ages of 30 days and 18 years) suffers from one of the following conditions throughout the term of the cover.
The child must survive for 14 days after diagnosis for the benefit to become payable.
Number of Exclusions applicable to CI: For life with CI cover, decreasing life with CI cover and IP with CI cover.
Failure to follow or seek medical advice.
Analyst's comment
The second generation offering from Progress from Royal Liver extends the scope of cover beyond the mortgage market to family protection.
The protection menu builds on the success of the previous mortgage protection menu, with the addition of family income benefit, available either as life cover only or with accelerated CI cover.
Other changes include increases to the GIOs and enhancements to the IP element within the menu such as increases in the level of the innovative carer's benefit, the addition of early WOP benefit and lifestyle support benefit.
Standalone CI cover is still only available when IP is selected.
Although this is out of step with other menu providers, it may encourage clients keen on CI cover to consider the merits of including an element of IP.
In purely product terms, there are menus offering slightly wider cover and flexibility of construction.
To some IFAs, the absence of guaranteed rates for CI may be perceived as a negative.
These shortcomings are, however, more than compensated for by the unique product design and service propositions.
The unfortunate thing for some IFAs is that access to the protection menu is restricted to certain intermediary firms, consequently, those who fall outside of this group will be unable to benefit from the many positives offered by the plan.
Nick Telfer, head of life and protection, Defaqto
