Holloway Friendly Society has introduced the new classic plan, a
revamped version of its classic income protection plan.
Holloway Friendly Society hopes the plan will help IFAs write new
income protection business and make income protection more
accessible to people who may be put off by the costs of policies
which have higher rates for smokers, women and some occupations.
The new classic plan provides cover of up to 60 per cent of earnings
subject to a maximum of £36,400 a year. There is a choice of day one
cover or deferred periods of four, 13, 26 and 52 weeks. There are no
loadings for occupation, gender or smoking.
At the outset, policyholders specify a retirement date and pay the
premiums until that date, otherwise early redemption penalties will
An own-occupation definition of incapacity applies for the whole term
and full benefits are payable for up to 52 weeks. After that period
reduced benefits of 50 per cent apply but full benefits will be
reinstated where there is no claim for 12 months. Benefits can be
index-linked at no extra cost and a tax-free lump sum is built up which
is paid when the policyholder retires.
Pioneer Friendly Society's income protection plan is a similar plan
that also offers a tax-free lump sum at retirement with no loadings for
woman or smokers. Comparing premium rates, a 30-year-old
housewife who requires £413.40 in benefit on an index-linked basis
with a retirement age of 55 and a deferred period of three months
would pay £10.07 with Pioneer Friendly Society and £12.82 with the
However, the extra cost of the Holloway plan may be explained by its
use of the own occupation definition of incapacity, whereas the
Pioneer plan switches to a suitable occupation definition after 12