Type: Menu-style protection plan comprising core critical illness cover and level, decreasing or index-linked life cover, optional disability cover, unemployment cover and income protection with premiums reduced by Vitality health programme
Minimum premium/cover: £25 a month/£10,000
Maximum cover: £500,000
Conditions covered: Primary serious illness cover – 9 cancer-related conditions, 13 heart and artery conditions, 23 stroke and nervous system conditions, 6 gastrointestinal conditions, seven connective tissue disease conditions, 7 urogenital tract and kidney conditions, 7 respiratory disease conditions to age 70 accidental HIV benefit, 8 musculoskeletal trauma conditions, four eye conditions to age 70, two ear conditions to age 70, major organ transplant 5 conditions of permanent disability; additional conditions with comprehensive serious illness cover – Two cancer-related conditions, 16 heart and artery conditions, seven stroke and nervous system conditions, one gastrointestinal condition
Minimum-maximum ages: 16-75
Minimum term: Five years
Options: Full serious-illness cover for children, disability cover, income protection, unemployment cover, waiver of premium, whole of life cover, minimum protected account option to reinstate set level of cover after a claim
Minimum sum assured/minimum premium: £10,000/£25 a month
Minimum-maximum term: Five years
Minimum-maximum ages: 16-75
Options: Disability cover, whole of life cover, income protection, waiver of premium
Commission: standard terms – 150% of Lautro with a 10% enhancement for all online submissions
Tel: 0845 279 3000
Prudential’s PruProtect is a menu-based protection plan comprising core critical illness cover and level, decreasing or index-linked life cover, with optional disability cover, unemployment cover and income protection with premiums reduced by Vitality health programme. Vitaility rewards policyholders for living a healthy lifestyle by awarding points for activities such as a health screen or fitness plans. Everyone starts at the bronze level and can move up through silver, gold and platinum bands, which will reduce the following year’s premiums.
Introducing the product, Highclere Financial Services partner Alan Lakey explains that Prudential has relaunched the flexible protection plan on the back of its innovative vitality points concept.
He says the plan can encompass life cover, critical-illness cover, income protection and redundancy cover and says the product has been repriced to make it extremely competitive.
Lakey points out that Prudential is using a concept proven in South African by its partner company, Discovery. “The concept is simple, yet brilliant. The fitness concept offering discounts to health clubs as well as reducing premiums will appeal to the very sector they are aiming at – health conscious individuals. Those planholders seeing regular premium increases are likely to devote attention to their lifestyle and health as a consequence. Prudential is likely to enjoy positive selection whereby their client bank contains a higher percentage of healthy policyholders,” he says.
Applicants can also choose to guarantee their cover up to 300 per cent of the original sum assured. If they receive a 100 per cent payout due to a stroke the policy will rebase to the original sum assured which can then pay out again for some other critical condition. Prudential also aims to provide acceptance terms within seven days for 80 per cent of applicants.
According to Lakey, Prudential beats the opposition on two counts. “Firstly, the critical illness concept is taken a stage further by enabling lesser conditions, which are nonetheless serious, to be covered. These range from angioplasty to pacemaker insertion and in total there are 153 different conditions covered. The plan does not necessarily pay out 100 per cent of the sum assured as lesser conditions result in a percentage payment such as 25 per cent or 50 per cent.
“Secondly, all planholders start on a bronze standard. If they achieve sufficient points by dint of healthy lifestyle or commitment to fitness they enjoy reduced premiums. Bronze planholders will suffer gradual premium increases,” says Lakey.
Discussing the potential drawbacks of the plan Lakey says: “Technically it is an excellent plan but it is sufficiently complex to confuse some potential planholders. This is likely to mean that it fails to challenge L&G and Norwich Union for serious market share.”
Lakey adds that policyholders are provided with details of how to accumulate sufficient points to reach silver, gold or platinum status. “This involves a commitment in time and effort which many consumers will be unable or unwilling to give. The reviewable premium version does not provide the usual 5 year guaranteed period which would allow some prospect of premium continuity.’ he says.
Scanning the market for likely competitors Lakey says: “Prudential’s plan is unique although it is being marketed within the traditional menu plan format. Competition is likely to come from Scottish Provident and LV= on the menu front with Skandia, Bupa and Royal Liver providing opposition for individual plans.”
Suitability To Market: Good
Competitiveness of premiums: Good
Adviser Remuneration: Good