Overview: This plan is designed to provide life cover throughout a policyholder's life. It incorpor...
Overview:
This plan is designed to provide life cover throughout a policyholder's life. It incorporates the following:
• It is non-qualifying, with a qualifying version used when existing term assurance policyholders wish to exercise their conversion option.
• Cover can be arranged on a level, or an increasing basis - this must be selected at the outset.
• Cover can be arranged on a single life, joint life first death or joint life second death basis.
• Premiums can be payable monthly or annually, or a one-off single premium can be paid.
• The contract can be arranged so that premiums are payable over the maximum benefit term, or over a limited period.
• For the maximum benefit term plans, premiums are payable until the plan anniversary immediately preceding the planholder's 90th birthday. No further premiums are payable, but cover remains in force for the rest of the planholder's life.
• Limited premium term contracts dictate that premiums should be payable for at least 10 years, but for a shorter term than the maximum.
At the end of the limited term, no further premiums are payable, but cover remains in force for the rest of the policyholder's life.
• The plan is not designed to provide a cash surrender value and there is no investment element. However, a cash value may be paid in respect of limited premium term or single premium contracts if the underlying value of the premiums paid is in excess of the costs incurred by the insurer in setting up and administering the plan and providing the life cover.
• An inheritance tax (IHT) increase option is also available.
Minimum acceptable age at commencement: 16
Maximum acceptable age at commencement: 89
Minimum sum assured: There is no minimum sum assured - this is determined by the minimum premium.
Maximum sum assured: Where level cover is selected, the maximum sum assured is £5m. If the yearly increase option is selected, the maximum level at outset is £2.5m.
Minimum acceptable monthly premium: £5
Minimum acceptable annual premium: £50
Limited premium payment term available: A limited premium paying term is available, provided that the maximum premium term at outset is greater than 10 years.
The chosen limited payment term must be:
• A full number of years
• Less than the maximum premium term
• 10 years or more
In certain circumstances, a cash-in value may be available with this limited payment term contract.
This reflects the fact that the value of the premiums paid would be in excess of those which would be required under a maximum premium term contract.
The cash-in value will never be greater than the sum assured, or the premiums paid. The minimum cash-in value is £10.
Minimum acceptable single premium: £500
Acceptable premium frequencies: Premiums can be paid on a monthly, yearly, or single basis.
Increase premium amount during policy term: Premiums remain level throughout the term, unless the yearly increase option is chosen.
Decrease premium amount during policy term: Premiums remain level throughout the term, unless the yearly increase option is chosen.
Increase sum assured subject to underwriting: The sum assured remains level throughout the term, unless the yearly increase option is chosen.
Decrease sum assured subject to underwriting: The sum assured remains level throughout the term, unless the yearly increase option is chosen.
Waiver of premium available: No
Joint life basis available: Joint plans can be taken out on a joint life, first death or a joint life, second death basis.
Joint life plan with three or more lives assured: No
Sum assured indexation: When the yearly increase option is chosen, premiums and the life cover increase by 5% compound each year. This option is not available if either a single premium is paid, or when regular premiums are paid over a limited term.
Guaranteed insurability options (GIOs): A GIO is available if the policyholder's IHT increases as a result of a gift or inheriting cash or residential property or a change in legislation.
Increases must be applied for within six months of either event.
Provided it was agreed at outset, no further medical details will be required in respect of these increases.
This extra cover feature can be declined by the underwriter at outset. If this does not occur, then the feature is automatically included. This feature can be used as often as required, provided that the level of cover remains between the minimum and maximum dictated by the company.
The minimum increase each time is £1,000. The maximum increase allowed is the lower of 50% of the initial sum assured or £500,000.
The maximum is measured against the increases taken, regardless of whether they are taken to cover a gift or inheritance, or because of a change in legislation.
For a gift or inheritance, the increase option is only available before age 70.
There is no age restriction upon the change of IHT legislation option.
Guaranteed premium rates: Yes
Critical illness benefit option: No
Terminal illness benefit option: No
Plan replacement option: No
Premium holiday option: No
Regular income facility available: No
Maximum sum assured without HIV test (single males):
Life only, for all applicants other than single males, aged up to 60 - £1,000,000. For single males, aged up to 60 - £250,000 (HIV antibody test).
Maximum sum assured without an electrocardiogram (ECG) test (life only): An automatic ECG is requested:
• up to age 50 for sums above £2,500,000
• for ages 51-60, above £750,000
• for ages 61-65, above £500,000
• for ages above 66, above £250,000
Non smoker rates offered: Non-smoker rates are available.A non-smoker is someone who has not used any tobacco products in the last 12 months.
Own doctor medical available: Norwich Union does not normally allow the client to attend their own doctor for medical examinations, although this can be considered in certain circumstances. Contact the insurer if required.
Free cover during underwriting: No
Total number of exclusions for all benefit types: There are no exclusions.
Maximum sum assured without private medical attendant's report (PMAR): Automatic PMAR limits are as follows:
• aged up to 30 - £600,000
• 31-35 - £600,000
• 36-40 - £600,000
• 41-45 - £300,000
• 46-50 - £300,000
• 51-55 - £250,000
• 56-60 - £250,000
• 61-65 - £50,000
• 66-70 - £10,000
• 70 and above - nil
Analyst's comment
As property prices continue to drive up the value of an increasing number of estates there is a growing need for IFAs to advise clients on inheritance tax (IHT).
IHT planning is a complex area. However, one of the simplest and sometimes most effective recommendations is to cover just the potential tax bill; Norwich Union is the latest provider to launch a product designed for this.
Their Guaranteed Whole of Life Plan is a non-qualifying, non-profit whole of life plan offering guaranteed premium rates which may make it more palatable for some clients than a unit-linked plan.
A qualifying version is available for clients exercising the conversion option on an existing term assurance plan.
The sum assured can be increased by 5% each year although there is no option to link to an index such as RPI.
The extra cover feature allows the planholder to increase cover without medical evidence following receipt of a gift or inheritance or because of a change in legislation.
Although waiver of premium is not available, the plan offers flexibility in structuring premium payments.
There is a choice between monthly, annual or single premiums together with the facility to restrict regular payments to a limited term; an extremely valuable facility for tailoring the plan to suit varying client budgets.
Nick Telfer, head of life and protection, Defaqto
