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Legal takes wholesome approach

Legal & General

Whole of Life Protection Plan

Type: Guaranteed rate whole-of-life plan

Minimum sum assured/premium: No minimum/10 a month or 100 a year

Minimum-maximum ages: 16-84

Options: Indexation of cover in line with average earnings index, waiver of premium, guaranteed insurability option allowing for increase in cover without further medical evidence

Charges: Implicit

Commission: Subject to negotiation

Tel: 0845 273 0010

Legal & Generals whole of life plan offers guaranteed premium rates and has been designed for inheritance tax planning. There is no investment element to the product.

Independent Personal Financial Management director Luke Gibbon says: “This could be attractive for some clients, as unit-linked products with an investment element do not guarantee future costs, which could be high.”

Gibbon feels the indexation option, where the sum assured will be raised by the retail prices index, is a good feature. However, he points out that the premium will be increased by twice the RPI to reflect the greater mortality risk.

Gibbon says: “The product focuses on inheritance tax planning. While on occasions whole of life plans can be a valuable tool in this arena, it must be remembered that insurance companies sell policies to make a profit and consequently, whole of life plans could almost be considered as an advanced funding of inheritance tax.”

Gibbon feels the premiums charged are similar to balanced cover whole of life plans but high compared to maximum cover plans. He says: “I ran a quotation on The Exchange based on a male aged 65 at outset for cover of 200,000. Legal & Generals policy cost 609.20 a year whereas Canada Lifes cost 542.67. “

Gibbon complains that critical and terminal illness cover is not available under this plan. He concludes that the affordability and need for the plan in the future should be considered before taking out this plan as unlike unit-linked plans, it does not have a surrender value.

BROKER RATINGS:

Suitability to market: Average
Flexibility: Poor
Premium rate: Average
Adviser remuneration: Good

Overall 5/10

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