The plan will provide a monthly income to replace some of the lost earnings when the policyholder is unable to work through illness or injury.
Under the new plan, clients can choose guaranteed or reviewable rates over a term of at least five years or select cover to a specific age of between 50 and 65 on a guaranteed or reviewable basis. According to Standard Life, this makes the product suitable to sell alongside a mortgage and it believes it can enable more people to understand the need for income protection.
Premiums depend on factors such as age, gender, smoking status, occupation, level of cover and features chosen, including the choice of guaranteed or reviewable rates. The amount of cover and the benefit can be linked to inflation.
The company has also introduced a guaranteed increase option if an event happens such as marriage, childbirth, moving house or job promotion, which involves a salary increase of at least 10 per cent. This option is available until age 55 or five years before plan is due to end and cover can be increased by up to half the original benefit to a maximum increase of £8,000 a year.
The insured person will not be required to provide any more medical or financial evidence. Waiver of premium and career break cover are offered at no extra cost, while cover while not in paid occupation is automatically included
Cover while not in paid occupation is available for up to five years and will be payable if the policyholder cannot performance certain physical tasks or has a serious mental illness. The plan also provides access to rehabilitation services Worldwide cover – covered anywhere but benefit paid for six months then have to go to one of list of countries to get paid after that.
While the cost of reviewable rates may initially be cheaper, guaranteed rates may work out cheaper in the long run.
Standard Life is similar to Aegon Scottish Equitable in offering guaranteed or reviewable rates and an own occupation definition of incapacity. Some providers offer income protection only a reviewable basis and use a definition of incapacity based on failure to perform a number of tasks, which is potentially more onerous than an own occupation definition.