Royal London Income Protection

October 2017 Royal London: IP


Royal London’s Income Protection proposition has been updated with a range of changes aimed at ensuring the proposition continues to meet clients’ changing needs. All changes are included as standard and the new benefits added to the menu product are:

Fracture cover. This pays up to £4,000 per claim with a maximum of two claims in any 12 month period. Multiple fractures are covered, up to the £4,000 claim limit.
Hospitalisation payment. This pays: £100 a night if more than six consecutive nights are spent in hospital during the deferred period. That includes connected claims, up to a maximum of 90 nights during the term.
Additional payment on death. A payment equivalent to 12 months premiums will be made if death occurs during the policy term.
Accelerated claim on terminal illness. The deferred period is waived and the monthly benefit is paid if the customer is diagnosed with a terminal illness and has less than 12 months’ life expectancy.
Back to work payment. This pays a percentage of the monthly benefit in the first two months after a customer returns to work following a claim if they have a plan with a 13, 26 or 52 week deferred period. As an example, if the cover payment period is one or two years, the customer will receive 25% of the monthly payment in month one and 10% in the second month after returning to work.

The maximum benefit has been increased and is now 65% of the first £15,000 of income, plus 55% of the remaining earnings before tax, up to a maximum of £250,000. In addition, changes have been made to what can be taken into account when calculating allowable cover and for employees these include:

Regular dividend payments that can be evidenced.
A spouse’s nominal income up to £11,500.

For the self-employed, certain fixed overheads such as rent for premises are now taken into account.

Comment: There’s life in income protection yet and in recent times we have seen a plethora of what might be loosely termed non-financial or as service-led benefits. That’s a welcome development (the 7 Families initiative demonstrated the importance of such benefits).

Roya London’s approach has been to add a range of benefits all designed not just to increase the plan’s appeal but also to have a practical benefit, at least to some customers. In addition, many claimants can now receive higher benefits in certain circumstances. It adds up to a more appealing proposition and so is a welcome development.   

Plus points: New and improved benefits and, potentially, more maximum cover for some; New benefits on death or if terminally ill; Has kept the underlying concept simple.

Not so plus points: Many of the changes won’t affect all customers; Some additional complexity; More benefits does not help if just comparing on price (but then we’d advise against doing that anyway!).


Rating (max 10): Innovation:  8. Overall: 8.5. Gold

Tags: IP; Royal London

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