The company says there is a need to protect wider financial commitments, not just mortgage or loan repayments. As the name suggests, the Lifestyle Cover plan, is designed to protect clients’ lifestyle by providing money for essential outgoings. If a client was unable to work through accident or sickness, or lost their job, the policy would provide a monthly benefit based on the income rather than mortgage or loan repayments.
The monthly benefit is paid for up to 12 months and can be used however the client decides. Cover is available on a single and joint basis, with the ability to choose accident & sickness only, unemployment only or both. A range of deferred period options are available, but the longest period of 180 days is available only on accident & sickness cover and cannot be established on a back-to-day one basis.
Defaqto insight analyst for life & protection Ben Heffer says: “In the current climate where people are losing their jobs, there is likely to be interest in unemployment cover either on a standalone basis or in conjunction with accident and sickness cover. Lifestyle cover compares well for unemployment cover offering 30, 60 and 90-day retrospective cover, which is not widely available in the market. The initial exclusion period for unemployment cover is a generous 60 days where 120 days or more is typical in the market.
“The premium structure is more complicated than many plans, which quote on a simple cost per £100 of cover basis. The premium depends on a number of factors, such as age, occupation and where the insured lives. However, this means that prices can be better honed to client circumstances.
“Advisers may prefer short-term income protection for certain clients or consider using it in combination with long-term income protection to insure the deferred period for an overall cost effective solution.”