Possible pay outs for claims rejected under traditional policies
Prudential has launched a new protection product covering more than 140 serious illnesses and over 50 disabilities.
The provider's Flexible Protection Plan - built in a similar way to a menu product - offers life cover, serious illness cover, disability cover, unemployment cover and income protection all in one plan.
It also allows clients to opt for multiple claims cover, which reinstates cover 14 days after a claim.
Payouts will be linked to the severity of the illnesses and matched to the financial impact this has on the claimant's lifestyle. More than one payout for the same claim is also possible if the condition worsens.
Developed in association with South African insurer Discovery, it has taken Prudential two years to finish the product.
Commenting on the long-awaited launch, Paul Cowman, head of protection at Prudential, said: "The protection industry needs a good shake-up, and our Flexible Protection Plan does just that. Many existing critical illness policies may only pay out if a condition is serious or very advanced. We will pay out earlier and possibly more than once for conditions that would be rejected under the claims process of traditional policies."
Cowman continued: "The current total and permanent disability option is flawed as it is very subjective. Therefore, we have created a temporary and partial disability option that pays out on severity."
Peter Chadborn, principal at Essex-based IFA firm CBK, applauded Prudential's development. He said: "This is so different. The fact that makes it really appealing is the sense of fairness; both the fact that it pays out on severity and that you can continue to be covered after a claim has been paid out."
However, others are less optimistic. Nick Kirwan, protection market director at Scottish Widows, said: "My reaction is two-fold. Product development is obviously very welcomed, as it will help grow the protection market. In terms of the individual product, however, it sounds quite complex. I think we should be making products simpler, not more complex."
Disagreeing with Kirwan, Chadborn replied: "People can use complexity as an excuse for not selling the product but the fact is that it is no more complex than a SIPP."
Chadborn concluded that the only possible barrier when selling the cover is cost. "It will not be the cheapest cover," he admitted.
