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Improvements at the Pru

Prudential has relaunched its menu-based protection plan to include the Vitality, a points system which rewards people for being healthy through discounted premiums.

The plan is similar to the previous flexible protection plan in that it offers core critical illness cover and level, decreasing or index-linked life cover. Disability cover, unemployment cover, whole of life and income protection are available as optional extras. The main difference is premiums can be managed through Vitality.

Policyholders start on bronze Vitality status and can earn points by completing a range of activities such as going to the gym or having a health screen. Many of the activities are offered free or subsidised to make them more affordable. Once policyholders have earned enough points, they move up to silver, gold and platinum status and this will determine the discount on premiums for the following year.

Prudential says most protection plans cover an average of around 35 critical illnesses but its severity-based approach allows 93-154 conditions to be covered, depending on the type of cover. This plan allows policyholders to select the level of severity they want cover for at the outset. The severity-based approach means policyholders could receive a payment at an earlier stage than some plans, but it also means some payments could be less than available elsewhere.

The serious illness element can be taken out on a fixed term or whole of life basis. It automatically provides £25,000 of cover for children with optional cover providing up to £100,000. The plan pays out 10-100 per cent of the sum assured according to the severity of the condition. Claims may be assessed against activities of daily living and activities of daily work.

If the plan pays out a percentage of the sum assured and the condition gets worse or another condition is diagnosed, the policyholder could receive another payment.

The other core option is life cover, which can be taken out on a level, decreasing or index-linked basis. Decreasing cover can be used to protect a repayment mortgage, while level cover could protect an interest-only mortgage.

An interesting feature of the product is the minimum protected account option, which will reinstate a set level of cover after a claim.. Another is the minimum protected account option, which will reinstate a set level of cover after a claim.

However, the necessary rules relating to various options may confuse people. One example is that waiver of premium cannot be selected where serious illness cover at 100 per cent is selected on its own or with life cover.

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