By Rachel Williams Scottish Mutual Pegasus has launched a new term critical illness plan and three n...
By Rachel Williams
Scottish Mutual Pegasus has launched a new term critical illness plan and three new product innovations across its term and whole of life range.
Customers with Pegasus' whole of life policy the Personal Assurance Plan will now be able to convert their critical illness insurance to LTC cover at any time after age 65. Unlike most long term care plans, the policy pays out a chosen sum assured rather than an income on failure of either three ADLs or contraction of Alzheimer's disease, dementia, Parkinson's disease, blindness or deafness.
If an income was required, the lump sum payout could be used to purchase an annuity.
Nick Kirwan, product development manager at Pegasus, said:
'At an older age LTC is cheaper than critical illness cover. Aged 65 the customer is not so concerned about loss of income and the mortgage is usually paid. People at that age are more concerned about being ill and needing care. This feature allows them to keep cover when it is needed at a price they can afford.'
Kirwan believes the plan's simplicity and affordability will make it attractive to older clients who can use the lump sum as they choose, perhaps for retiring abroad, paying nursing home fees or adapting the home. He added: 'While we are not promising to fully indemnify care costs, this will help.'
The Personal Term Plan, which replaces Priority and Ultimate Cover, includes two extra features.
The replacement cover option applies to holders of joint life policies. Usually when one partner makes a claim, the policy is terminated leaving the unaffected partner without cover. The Personal Term Plan enables the healthy partner to take out an individual policy to insure a sum of £50,000 prior to age 55 without further underwriting.
Kirwan said: 'We always believe in split sums assured, but many people will buy a joint policy to protect their mortgage for ease and simplicity. If they do this, this feature is here to help them.'
Pegasus also claims it is the first provider to offer a critical illness buy-back option. If chosen at plan outset, this allows customers who have made a claim to take out more cover a year after the initial illness.
The premium is £25 per year irrespective of age and health and covers the insured person against cancer, heart attack and stroke for a five-year term and pays out 35% of the original sum assured. The cost of this feature is 4.5% extra on policies with life cover and 6% on those without.
In addition to these new features, the plan offers a wider range of cover. Assault causing HIV infection, and bacterial meningitis have been added to the portfolio of cover.
War risk and alcohol abuse are among those conditions no longer excluded.
Kirwan said: 'This an example of how exclusions are going to be in the market. If exclusions are going to become a point of competitive comparison, providers will want to make sure exclusions are there for the right reasons.'
