The following core benefits are available: • Life cover; serious illness cover One or both of th...
The following core benefits are available:
• Life cover; serious illness cover
One or both of the above benefits are available at outset. In addition, the following rider benefits can be added to the plan if one or more of the core benefits is present:
• Disability cover; income protection (IP) cover; optional serious illness cover for children; unemployment cover and carer cover insurance; minimum protected account; waiver of premium on death; waiver of premium on incapacity; waiver of premium on serious illness.
Product distributed through IFAs: Only available to a limited group of IFAs.
Plan type:
• Pays out earlier on certain conditions compared to traditional plans
• Pays out on more than one event, subject to insured fund not being completely depleted
• Allows the policy to continue after a claim, subject to insured fund not being completely depleted
• Cover can be replenished after a claim without new exclusions, if minimum protected account has been selected
• Covers more areas of the body than traditional critical illness (CI) insurance
• Links payouts to the severity of the event
• Provides an annual policy statement indicating cover and premium levels
• Allows simultaneous claims for benefits chosen, such as life cover, serious illness cover and disability cover
• Additional child cover option
Minimum acceptable age attained at commencement for insured: 16 at entry for all benefits with the exception of unemployment cover, where the age is 17.
Maximum age at commencement of insured CI: 64 at entry for standard cover and 59 for low start cover.
Minimum policy term: Five years for standard cover and 10 years for low start cover.
Maximum expiry age: Where serious illness cover is included the maximum expiry age is 70. Benefits will be available on a whole of life and a fixed-term basis. For fixed term cover, the maximum age at expiry and minimum term will be defined by the benefits chosen. Accelerator benefits and disability cover must have a benefit term less than or equal to that of the plan account. This means term benefits can be attached to a whole of life plan account. The exception is on decreasing term plan accounts, where all benefits attached to the plan account and disability cover must have the same term. Benefits attached to a decreasing term plan account must all have the same term, limiting the maximum term for the benefits to the shortest maximum term of the benefits selected. IP cover and unemployment cover term can exceed the term of the plan account.
Maximum term (years) for CI cover: Where serious illness cover is included, it is 50 years where premiums are reviewable and 30 where they are guaranteed.
Maximum sum assured where CI is included: £500,000 serious illness cover per life.
Guaranteed premium rates for stand-alone CI: For fixed-term benefits attached to the plan account and for IP cover there will be two options:
• Premiums guaranteed for the term of the benefit
• Premiums that are reviewable and therefore may change over the term of the benefit
All benefits attached to the plan account must have the same guarantee basis. However, there is no need for all benefits under a plan to have the same guarantee basis. For example, it is possible to have serious illness cover with guaranteed premiums and IP cover with reviewable premiums. All fixed-term benefits will be available on a reviewable and a guaranteed premium basis.
Reviewable premium rates for accelerated CI: The premiums will be reviewed on the fifth or any subsequent plan anniversary and at five-year intervals following the date of such variation.
Plans allowing a choice of interest rate assumptions: The interest rate used to calculate the value of the plan account set up on a decreasing basis will be 10%. The value of the plan account will be recalculated each month.
Automatic sum assured indexation available: An indexed plan account will increase in line with the Retail Price Index, subject to a maximum increase of 10% and a minimum increase of 0% per year. In the event of a claim reducing the plan account, indexation will continue to apply to the now lower plan account. The premium and benefit increases will occur at each plan anniversary, with the first increase occurring 12 months after the start date.
Joint life/first death plan available: For joint life plans, the two lives share one plan account. The amount of life cover for life two is expressed as a percentage of the plan account and must take a value from 0% to 100% inclusive.
Waiver of premium available: Yes
Maximum age at entry to include waiver benefit:
• On death - 64; on disability - 59; on serious illness - 59.
Does the plan offer the option to buy-back CI after a claim: Serious illness cover may not end after the first benefit payment. If there is sufficient plan account remaining and the cap on total payments made under the serious illness cover has not been reached, additional benefit payments may be made via the multiple claims facility. The insured may qualify for multiple serious illness cover claims within or across any claimable areas of the body as a result of the same life-changing event. In this case, only the claim with the highest severity would be paid. If this severity is shared across two conditions only one of these will be paid.
Multiple claims by one life from the same life-changing event: If there are two types of benefit claim - for example, a serious illness cover claim and a disability cover claim, from the same life-changing event by one life, then both claims are paid in full.
Simultaneous claims: Simultaneous claims may arise for life one and life two under serious illness cover. This will result in two benefit payments. In this case, the second benefit payment amount will be determined based on the plan account value before it has been reduced by the first benefit payment. Should the sum of the two benefit payments exceed the plan account amount, it will be terminated after both benefit payments have been made, unless the minimum protected account exists. If the plan has minimum protected account, the plan account will be restored after the claim payments for this life-changing event - for example, the minimum protected account is restored at the end of the survival period.
Guaranteed insurability option: Yes
Joint life separation: A joint life plan may be split into two single life plans. This involves removing either life and setting up a new single life plan for the life removed. Both lives will have the same benefits, amount of benefits and term for the benefits on their plans as previously insured on the original plan, subject to conditions. The option is available at anytime throughout the plan term.
Period within which a claim must be notified: Six months of the date the insured was first told of the diagnosis. If such notice is not received, Prudential reserves the right to decline the claim.
Serious illness cover: Aims to pay out a lump sum should the insured be diagnosed with a serious illness, and meets the definition for the serious illness, that affects the insured's lifestyle in such a way that their ability to function normally is altered. Unlike standard CI products, the cover has been designed so that the benefit amounts are proportional to the severity of the condition with payments ranging from 10% to 100% of the serious illness cover amount.
Serious illness cover for children: Yes.
Analyst's comment
Prudential's launch of its Flexible Protection Plan is the most exciting development in the protection market since critical illness (CI) insurance. The new proposition brings a breath of fresh air to the beleaguered protection market.
On the surface, the Flexible Protection Plan may appear more complex than traditional CI policies. But the same client needs are addressed and the Flexible Protection Plan does it in a fairer way.
At its core, the product has a 'plan account' from which life, serious illness cover and serious illness cover for children are paid. Benefits are expressed as a percentage of this account and on claim, the benefits paid are 'drawn-down' from it. This means that multiple claims can be paid and the 'minimum protected account' option allows the account to be reinstated to a predefined level following payment of a claim. This is a major improvement on the traditional protection policy where, generally, cover ceases on payment of a claim.
The serious illness benefit provides cover for more than 140 different events grouped into 13 different claimable areas of the body. The benefit is geared to the severity of the condition and its impact, very different from the traditional 'all or nothing' approach taken by CI. Where severity is low, the amounts payable for some claims may be less than under traditional policies however there are many circumstances where the Flexible Protection Plan will pay out where other policies would not.
Disability cover sits outside of the plan account and provides a lump sum payment in the event of being totally, partially or for certain occupations, temporarily disabled. This approach offers far more to the consumer than the conventional total permanent disability benefit where someone who is 99% disabled receives nothing.Cover can be arranged on a whole of life or term basis with a choice between reviewable and guaranteed premiums under the later. It will not be a low cost option however if it is affordable the cover available makes it worthy of consideration.
Nick Telfer, head of life and protection, Defaqto
