Aegon UK has updated its income protection proposition and the main change is a new two year option on its personal and executive income protection plans.
In addition, the insurer has improved the personal IP replacement ratio from a flat 55% to a tiered ratio based on income.
There is a lump sum death payment of £5,000 now on personal IP plans too. Accidental death benefit is available on all personal benefits (except gift inter vivos). On business benefits that include IP (except key person and executive), it is increased from £250,000 to £300,000 and from 60 days to 90 days.
The guaranteed insurability option (GIO) maximum benefit is raised to £200,000 for lump sum benefits and to £12,000 a year for family income benefit (FIB), critical illness (CI) FIB, life with CI FIB and income protection.
The executive IP replacement ratio of 75% has been upped to 80% and the maximum benefit limit for high earners upped to £250,000.
Comment: The big change here is the new two year benefit term option. That means a lower premium and lighter underwriting too, but won’t be ideal for everyone.
A number of other changes have been introduced and, overall, it adds up to a useful package. Some benefits, such as accidental death, are arguably a bit unnecessary (why does your family need more money if you die by accident rather than illness?), but overall this is a good package of improvements.
Plus points: New two year option added; Maximum benefit formula now tiered; Life cover on personal plans added; GIP increased; Accidental death benefit upped.
Not so plus points: More complex income formula; Two year option may not be the best route if a long term illness or disability hits; Life cover is small; Accidental death benefit is a bit gimmicky.
Rating (max 10): Overall: 8. Gold
Tags: IP; Aegon
I Mark: No