View more on these topics

Aviva axes critical illness cover from disputed protection product

Aviva-signage-building-2013-700.jpgAviva has removed critical illness cover from its relevant life insurance product, which was criticised by competitors for not being compliant with tax rules.

Aviva launched its relevant life policy with critical illness cover in January 2016 – the first provider to do so.

Relevant life insurance is a tax-efficient life insurance policy that allows companies to offer a death-in-service benefit to employees.

The products faced criticism from other insurers, including Legal & General and Royal London, which disputed if they were allowable within tax rules when critical illness was bundled in.

Aviva continued to stand by its product saying it was compliant with legislation.

However, in a statement today Aviva confirms it has removed critical illness from the relevant life insurance product.

Aviva says there has been “continued confusion” in the market about relevant life insurance with critical illness cover, which has led to a “level of uncertainty” in the adviser community.

It has changed the relevant life insurance product to offer an “employee significant illness cover”. That will continue to provide cover for advanced cancer, serious heart attack and stroke, in the event they lead to retirement of the person covered by the policy.

Aviva says HMRC has agreed the new product qualifies as a relevant life insurance policy and is compliant with current legislation and tax rules.

It says the changes don’t affect advisers or their clients who have an existing relevant life insurance policy with critical illness cover or who have a policy application coming out of binding quotations in place by 11 March 2018.

The provider has confirmed it will always pay a valid claim against the existing policies.

Recommended

7

Critical illness vs income protection: Which is easiest for advisers?

There is a common misconception that harsh underwriting makes income protection more difficult for advisers to place. Income protection has always had a reputation for being difficult due to the strict view insurers take when underwriting the cover. Even now I still hear “harsh underwriting” as a reason advisers do not offer it, defaulting instead […]

Cards-Poker-Risk-Risky-Gamble-21-700x450.jpg

Fixed protection: stick or twist?

What increase in standard lifetime allowance means for clients with fixed protection Mindy has had income for the last three tax years of around £38,000 from her tailoring alterations business. She plans to sell the business and take her pension benefits to fund her day-to-day living expenses when she reaches her 60th birthday in August. […]

1

Protection Watch: Earlier claims payment and critical illness compared

Protection Review chief executive Kevin Carr looks at recent market events Paying claims earlier Paying claims is the most important thing the protection industry does – but paying claims sooner comes a close second. British Friendly has received praise from brokers for trialing a new “immediate support payment” for claims received on income protection policies. […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment