Type: Menu-style protection plan comprising core critical illness cover and level, decreasing or index-linked life cover, with optional disability cover, unemployment cover and income protection
Minimum premium/cover: £15 a month, £5 a month for online applications/£10,000
Maximum cover: £500,000
Conditions covered: 10 cancer-related conditions, 26 heart and artery conditions, 27 stroke and nervous system conditions, 12 gastrointestinal conditions, seven connective tissue disease conditions, 11 urogenital tract and kidney conditions, 12 respiratory disease conditions, accidental HIV benefit, 11 musculoskeletal trauma conditions, eight eye conditions, three ear conditions, 13 endocrine and metabolic conditions, major organ transplant
Minimum-maximum ages: 17-65
Minimum term: Five years
Options: Full serious illness cover for children, disability cover, income protection, unemployment cover, waiver of premium, minimum protected account option to reinstate set level of cover after a claim
Minimum sum assured/minimum premium: £15 a month, £5 for online applications/£10,000
Minimum-maximum term: Five years
Minimum-maximum ages: 17-65
Options: Disability cover, income protection, waiver of premium
Commission: Initial 140% to 170% of Lautro, plus 10% enhancement for online applications
Tel: 0845 279 3000
Prudential’s flexible protection plan is a menu-style protection plan comprising core critical illness cover and level, decreasing or index-linked life cover. Disability cover, unemployment cover and income protection are available as optional extras. Unlike traditional critical-illness policies, this plan covers serious conditions that are not necessarily critical but are severe enough to impact on a person’s lifestyle and earnings. The serious illness element of the plan covers 140 illnesses, conditions and procedures and pays out 10-100 per cent of the sum assured according to the severity of the condition.
Highclere Financial Services partner Alan Lakey thinks Prudential has been brave in introducing a severity-based plan that takes the critical illness concept a stage further.
“Like the basic critical illness concept, it is based on a South African model and looks to ensure that more conditions are covered and covered earlier in the diagnosis chain,” says Lakey.
He observes that the literature provides a fold-out sheet listing the various conditions covered. “However, many are unknown to the general public and mean little when documented in such a fashion,” he says.
In Lakey’s view, the success of critical-illness cover has been its intrinsic simplicity – if you are diagnosed with a named condition, you are paid out.
Although he thinks that in introducing additional conditions Prudential has increased the likelihood of a claim, he complains that it has also significantly increased the complexity factor. “Additionally, some conditions only receive a partial payout of 25 per cent, 50 per cent or 75 per cent. Again, this reduces the possibility of a policyholder fully understanding the plan and, if truth be told, the possibility of the adviser understanding the plan,” says Lakey.
While Lakey believes comprehensive cover is to be applauded, he considers this plan to be much too complex for all but a small section of the adviser market. “Strictly speaking, this plan has no competition by way of design. However, it is lined up against traditional critical illness plans, some available within the menu format,” he says.
According to Lakey, Bupa and Skandia Life offer the most comprehensive alternatives to Prudential’s plan. He adds that Scottish Provident also provides above average protection products.
Summing up Lakey says: “While innovation is all too rare within the protection arena, this plan will be too confusing to gather all but a small market share. With the imminent deadline for providers to meet the revised ABI definitions, there may be one or two other companies offering competition.”
He concludes: “Advisers still recoil at the memory of the Prudential reneging on 40,000 critical illness applications four years ago. Such memories are hard to shake off. Also, the recent “knocking copy’ adverts did Prudential little credit and adviser goodwill may prove thin on the ground.”
Suitability to market: Poor
Premium rates: Poor
Adviser remuneration: Good