Legal & General Rental Protection Plan
L&G has launched its Rental Protection Plan – a suite of products offering a choice of three products all through a single application. The products have been specifically designed for the rental market and generation rent. The three products included are:
• Rental Income Protection Benefit.
• Rental Life Insurance.
• Rental Life Insurance with Critical Illness Cover.
Having three products gives renters the flexibility to select the relevant product or products to meet their needs and budget, depending on their individual circumstances. In certain circumstances they can also increase cover if their rent increases, or if they relocate, or if they otherwise change tenancy agreement, without fresh medical underwriting. This guaranteed insurability option (GIO) gives tenants the option to increase their rental income protection benefit each time by up to 50% of the original monthly benefit, up to a total of £833 per month.
On Rental Life Insurance or Rental Life Insurance with Critical Illness Cover, the sum insured may be increased by the lower of £1,050 per month, or, the amount of the increase in the life insured's rent. The maximum total for all increases is £1,400 a month or 50% of the original amount of cover (providing the monthly benefit does not exceed the maximum allowed, based on parameters for maximum allowable benefit as calculated using the replacement ratio of 60% of the first £60,000 of income and 50% thereafter).
A full launch to L&G’s intermediary partners is expected later in 2019.
Comment: The private rental sector has doubled in size since 2002 to 4.5 million households today. Moreover, renters spend, on average, a third (35%) of their income on rent (even higher if they live in London), and renting can cost more than buying. Knight Frank estimates that nearly a quarter of UK households will be in private rental accommodation by 2023.
But generation rent has not been targeted to date by long term protection insurers – partly because traditionally renters were expected to have worse claims and lapse experience than buyers. Into this void has stepped L&G and, after an initial pilot, the plans have been officially launched to Mortgage Advice Bureau members only, but is expected to be rolled-out more widely later this year.
It will be interesting to see how the new plans sell and also whether other insurers follow L&G’s leader. We expect some at least to do so.
We have also awarded the plan our coveted I Mark. This recognises innovation and, in this case goes to L&G primarily for targeting the private rental market with a suite of valuable protection products. This market has been largely ignored by long term insurers, yet it’s a thriving and growing sector. The plans’ GIOs are important too, as is the name – at least if you want to get the best State benefits you can. The underlying products are relatively standard, but it’s more the overall approach that wins our plaudits here.
Plus points: A choice of three individual protection products aimed specifically at renters; Ideal for generation rent; Useful GIOs for renters; The rental market is largely untapped for long term protection .
Not so plus points: Life insurers have steered away from the rental sector in the past, fearing worse claims and lapse experience; Will other insurers follow L&G’s lead?; Not yet available to all intermediaries.
Website: http://www.legalandgeneral.com
Rating (max 10): Overall: 8. Gold
Tags: IP; Legal & General
I Mark: Yes