LV= Income Protection
LV= has introduced a number of changes to its existing income protection (IP) plan:
• It has stopped offering the work tasks definition of incapacity and instead moved to 100% own occupation definition. That has resulted in 325 occupations moving to own occ. At the same time, LV= has increased the number of jobs for which it will provide own occ by 225. The own occ definition applies throughout the policy term and any claim.
• Cover for homemakers has been simplified. They can now claim if unable to either prepare a meal or to do basic housework. The maximum level of cover has also been increased from £1,250 to £1,500 a month.
• If a customer becomes unemployed after cover starts, they can now keep own occ cover for the first year and throughout any claim made during this time. After 12 months, they will be offered homemaker cover (max cover £1,500 a month).
• Maximum age has been extended to age 70 across all occupations. Previously maximum ages were lower for roles such as teachers.
Comment: LV= has both simplified and improved its IP cover. Definitions other than own occupation both complicate IP unnecessarily (as it has turned out) and are confusing – ‘any occ’ looks at first sight to be ‘better’ than ‘own occ’ but the opposite is true, once you think about what the terms actually mean. Of course, it is not all good news – insurers will have some occupations that they can no longer offer cover for at all, and there is the risk to customers that underwriters take a harsher underwriting stance because the risk to the insurer is greater. We shall try to monitor how much this happens in practice, so if you are an intermediary, do let us have your experiences.
That said, these are very positive changes and are part of the growing trend to make IP appeal more than it has done in recent years. IP continues to be the most important cover to have for many people, yet it consistently sells in much lower numbers than critical illness or term insurance.
Plus points: Own occ only for all occupations that are acceptable; 325 occupations moved to own occ; 225 jobs now acceptable that weren’t before; Better cover for homemakers; Unemployed customers get own occ for a year before having to move to homemaker cover; The changes simplify IP and make it more appealing to customers and to non-specialist intermediaries alike.
Not so plus points: Own occ means some occupations can’t be accepted; Stricter underwriting?
Website: http://www.lv.com