LV= Income Protection
LV= has updated its existing individual income protection product, introducing a number of changes aimed at increasing access and providing wider cover. Two new features are:
Fracture Cover. This benefit pays up to £2,200 on a sliding scale for specified bone fractures, the benefit depending on the fracture.
Death Benefit. This is £5,000 if they die in the first four years, rising to £10,000 after that.
Both the new benefits are automatic and provided at no additional cost. There is also no further underwriting or application forms to complete, LV= says.
At the same time, LV= has added:
A Premium Payment Holiday. This means customers need not pay premiums for up to six months if they are made involuntarily unemployed or leave work to become a full-time carer.
Teachers’ Sick Pay Guarantee. LV= says this offers simple, tailored income protection payments for teachers who, like many public sector employees, have sick pay arrangements that change depending on length of service. The customer must choose a 12 month waiting period and, as long as their sick pay scheme matches that for a local authority teacher, LV= will pay the benefit early to mirror the customer’s employer sick pay arrangements.
Higher maximum benefit. The maximum insured benefit is now 60% of earnings.
No low cease age. LV= has removed the minimum cease age of 50 to enable advisers to match the IP benefit to younger clients’ needs and/or a specific mortgage term.
Advisers can obtain quotes through LV’s new quote and apply system, which is called Fastway.
Comment: We last reviewed LV’s IP plan back in 2014 and it has now taken the opportunity to introduce a range of changes and benefits to keep the proposition fresh.
Paying a death benefit is a nice to have, even if the actual benefit is relatively low, while fracture cover is also useful and should appeal most to younger customers. Some of the tweaks only affect specific markets e.g. teachers, but that’s no bad thing, and shows an insurer that is listening to advisers and looking to come up with solutions.
Scrapping the minimum cease age opens up the plan to mortgage brokers, for whom the effective loss of MPPI (it’s still available but sales are way down on the peak and it is widely seen a s a toxic product now) was a blow and where long term IP has (so far) failed to capture the imagination of would-be buyers or indeed many intermediaries. Linking the IP term to the mortgage term is attractive, although it may mean the client is underinsured once the mortgage finishes.
All in all the changes are welcome and LV has also avoided the all too easy trap of adding complexity along with benefits. The new quote system, although we have not actually tried it, should also benefit advisers.
Plus points: A range of useful new features and benefits; No price increases to pay for the changes; Makes the plan appeal more to a wider audience; A better way into long term IP for mortgage brokers?; Over-complication has been avoided.
Not so plus points: Death benefit is £5K rather than £10K in the first four years; Both the death benefit and fracture benefit have relatively low benefits; Choosing a shorter term (e.g. to match a mortgage) can leave customers uninsured or under-insured when the mortgage ends
Website: http://www.lv.com.
Rating (max 10): Innovation: 8. Overall: 8.5. Gold
Tags: IP; LV=