Type: Individual income protection plan
Minimum benefit/minimum premium: £3,600 a year/no minimum
Maximum benefit: Up to 50% of gross income to a maximum benefit of £120,000 a year
Minimum-maximum ages: 18-54
Minimum term: 10 years
Deferred period: Four, eight, 13, 26 or 52 weeks
Definition of disability: Own occupation, suited occupation for class four occupations after 12 months
Options: Children’s benefit, rehabilitation benefit, proportionate benefit, terminal illness benefit, and medical expenses benefit are automatically included, level or escalating benefit, waiver of premium during claim, lifestyle and mortgage guaranteed insurability options, career break up to two years, payment holiday
Commission: Online submissions – indemnity commission 130% of the first month’s premium multiplied by 12, non-indemity commission 143% multiplied by 12, paper submissions – indemnity commission 120% of the first month’s premium multipled by 12, non-indemnity commisison 132% multipled by 12, premium increase of at least 10% will generate initial commission of 120% of increased monthly premium multiplied by 12, all submissions renewal 2.5% of annual premium
Holloway Friendly Society’s personal income protection is based on an own-occupation definition of incapacity for class one professional, such as solicitor, and jobs rated class one to three. Class four jobs, such as mechanic, are initially based on an own occupation definition of incapacity. This changes to a more onerous suited occupation definition after 12 months.
Highclere Financial Services partner Alan Lakey thinks that for too long the world of income protection has suffered from inappropriate and unattractive policy design. “This has particularly been the case where higher-risk occupations are denied worthwhile claim definitions. This attitude has been changing in recent years and the new product from the Holloway is a definite move forwards,” he says.
Lakey points out that the Holloway is an adviser-only friendly society which is aiming for a significant share of the market by beating the usual suspects at their own game. “Unlike most friendly society offerings it provides guaranteed rates and also differentiates by reference to occupation, age and gender,” he says. He adds that the Holloway also provides reviewable rates through its classic income protection plan, which is also an option for clients.
Considering the attractive features of this plan, Lakey says: “Unlike most insurers, the Holloway offers an own occupation definition of incapacity to all occupations, although those within occupational class four move across to a suited definition after 52 weeks of a claim.”
He points out that the plan automatically includes premium waiver, which he regards as sensible, but adds that it only kicks in after week 52 of the claim.”
Lakey feels that a unique aspect is the payment of one month’s benefit if a child of the insured suffers a critical illness or undergoes surgery.
“Additionally, all standard exclusions have been removed, although certain dangerous pursuits may be excluded,” he says.
Turning to the potential drawbacks of the plan Lakey says: “Premium levels are not of overriding importance but, for category four occupations, particularly females, Holloway is somewhat expensive.”
He also observes that its application form asks for a great deal of information, which he says is great for underwriters but acts as a dissuader for many clients. “Maximum benefit is limited to 50 per cent of previous income, which is less generous than some,” he says.
Identifying the main competitors Lakey says: “By venturing into the mainstream, Holloway is competing with Friends Provident, LV= and Royal Liver as well as the Pioneer, Cirencester and Shepherds friendly societies.”
Suitability to market: Good
Premium rates: Good
Adviser remuneration: Good