The choice between sitting at my desk in London happily editing features or heading off to the spring sunshine of Johannesburg and Cape Town was a difficult one to make. Sometimes the sacrifices we have to make for work are too much to bear. Thankfully this was not one of those times.
Anyway back to the reason for the trip.
PruProtect, which is officially launched today, says that the new product will revolutionise the life and income protection market and will change the way that people think about life insurance.
The new venture will sit along side sister company PruHealth, and offer life insurance (on a whole of life basis) and serious illness cover, or both if the client wishes.
In addition to this, customers can then add on a number of optional extra levels of cover such as income protection, disability cover, unemployment cover and serious illness cover for children.
However, the ‘revolutionary’ part of the product comes from the severity based serious illness cover combined with the facility for policyholders to reduce their premiums by adopting a healthier lifestyle.
Policyholders who sign up to the Vitality programme, which is used by PruHealth to offer discounts on health insurance to people who try and look after themselves, could reduce their annual premiums by 2.5 per cent a year. This reduction, we were told, is unlimited so in theory, if you live long enough, you could get your life, CIC or IP cover for free. But the full reduction is only available to the most committed or ‘engaged’ policy holder. For the less enthusiastic, reductions of 1 per cent a year are available, or for those who only have a passing interest the premiums remain the same.
There is a but, however, and a fairly big but it is. For those policyholders who make absolutely no effort to improve their health, their premiums actually go up at the end of the each year by 2.5 per cent. This increase is going to be capped but at present I can’t remember what the upper level is going to be. Must be the jet lag.
There are a number of ways you can prove you are ‘engaged’ with the Vitality process, including frequent gym visits (as with PruHealth, PruProtect offers discounted gym membership at selected gyms), taking a fitness assessment or chosing to undergo health screening ( such as cholesterol testing) or by simply not smoking.
All the parties involved in the new launch are, naturally enough, very excited about it and thanks to the existence of PruHealth they are confident they will be up and running and ready to quote for new business from tomorrow morning.
Only time will tell how successful the option will be. PruProtect says this product will not only be of interest to the relatively small numbers of people who are already fit and active. The company also says that the product is not too complicated for advisers to explain to their clients.
The few advisers I have spoken to so far say innovation in the protection market is to be welcomed (although it has been suggested this looks a bit like Pru’s existing product with Vitality bolted on), especially anything that increases take up rates.
But it was pointed out that some advisers may have to justify why they recommended a product for which their premium actually managed to increase at the end of the year.
The other big issue is over the British attitude to health and illness insurance in general. In countries such as South Africa, where there is no welfare state, life insurance, CIC and health insurance are seen as more of a necessity and there is a much greater awareness of them. Offering programmes such as Vitality is a way of attracting consumers who are already in the market to buy. Having to convice people it is necessary is another matter altogether.
Next week I’m standing in for our mortgage reporter and I’m off to see the effect of the collapse of the US sub-prime market for myself. Or maybe it will be back to the features.