Royal & SunAlliance (RSA) is to change the way free cover limits are calculated on group income prot...
Royal & SunAlliance (RSA) is to change the way free cover limits are calculated on group income protection schemes, in a bid to simplify the application process.
Free cover limits, which determine the level of cover available under a group scheme before evidence of good health is required, are traditionally expressed as an amount of the policyholder's benefit. But RSA will now calculate free cover limits based on an individual's salary.
According to the insurer, the move will make life easier for IFAs and bring greater transparency to group income protection, helping clients to understand how free cover is calculated.
Peter Anderson, corporate market leader at RSA, said: 'Simplifying free cover limits makes life easier for both clients and their advisers. By expressing free cover in terms of a member's salary we have taken away any need for complicated benefit calculation.'
RSA also claims free cover limits could be increased by up to 50%, as additional cover for pension scheme contributions and employers' NI contributions are disregarded for evidence of health purposes.
Derry-based IFA Drew Folland, principal of Drew Folland Financial Management, believes that RSA's move to simplify free cover should be welcomed by the industry.
'Basing the limits on individual salaries is probably a fairer and clearer way of calculation and definitely seems to make sense,' said Folland.
