Prudential's Flexible Protection Plan set to use points system already trialled in its health arm
By Johanna Gornitzki
Prudential has added the Vitality points system, currently used on its health side, to its Flexible Protection Plan in a bid to combat poor sales figures.
The new product, which is a joint venture between Prudential and South African insurance giant, Discovery, will reward customers for looking after their health.
Entitled PruProtect, the firm decided to roll the product out after having considered "pulling the plug" on its Flexible Protection product, which has experienced disappointing sales since its launch last year despite being hailed as a great innovation.
The original Flexible Protection Plan offered severity based serious illness cover alongside life and income protection cover.
By adding the Vitality system, Prudential now hopes sales will pick up by awarding new policyholders points for pursuing a healthy lifestyle including going for health screenings, downloading meal plans, and going to the gym or using a pedometer. Existing Flexible Protection holders will also be given the opportunity to move across to the new product.
Shaun Matisonn, chief executive of PruProtection, the holding company of PruProtect, said the average premium for life and serious illness cover would be £60 to £70 a month, but added that customers could reduce their premium by up to 2.25% a year if they earned a high amount of points. "After three or four years you could start seeing significant savings," he said. However, each year the premium would change depending on what the policyholder does and a 2.25% increase in premiums could also be incurred if they fail to collect enough points.
As part of its new offering, Prudential has also promised that 80% of applications would be on risk within seven days.
Advisers who were invited to the pre-launch of the product applauded the new offering. Peter Chadborn, principal of IFA firm CBK, said the product supported the need for quality advice.
"It demonstrates that those that are prepared to understand and recommend it are prepared to think outside the box and look for fresh ideas for addressing clients' protection needs."
Agreeing with Chadborn, Kevin Carr, head of protection strategy at LifeSearch, said: "The protection market is in dire need of innovation and new ideas and this is certainly one of the better attempts. The Vitality concept is proven in South Africa and is already working well in the UK on the health side, so if Prudential can get the pricing right and make sure its service is up to scratch it could be onto something this time."
However, both were cautious about Pru's seven-days underwriting promise. Chadborn said he would be "surprised if a seven-day end-to-end process could be achieved".
Carr added that PruProtect should fare better than Flexible Protection as premiums are likely to be more competitive, but emphasised that Prudential needs to get its communications, relationships and service "spot on" to get the product up and running.
PruProtect launched on 25 September. Meanwhile, Prudential's old protection arm has now closed to new business.
