The company pulled out of the guaranteed rate market 15 years ago. It felt guaranteed rates were not sustainable at that time due to factors such as recession and bad claims experience. It says that, as many IFAs prefer guaranteed rates, which other providers continued to offer, its ability to work with intermediaries was limited.
This product signals the company’s commitment to rebuilding its relationship with the IFAs it sees as crucial in getting the income protection message across to the public.
The new product provides cover for up to 60 per cent of the first £25,000 gross earnings and 50 per cent of the remainder up to a maximum of £180,000. It has no standard exclusions, provides a choice of guaranteed and reviewable rates, a range of flexible options such as limited benefit terms, which can reduce premiums by limiting benefit payments to a maximum of five years.
Policyholders can choose from retirement ages of 50 to 70, deferred periods of four to 112 weeks and benefit can be paid on a level or index linked basis.
A guaranteed insurability option enables policyholders to increase cover at key life events such as getting married, moving house or having a baby without the need for further medical underwriting. Career breaks are also covered and if incapacity results in a hospital stay longer than seven days, policyholders receive benefit payments for £75 a night after day seven, for a period of up to 90 days.
The definition of incapacity is based on policyholders being unable to perform their own occupation, but there are circumstances where a personal capability assessment will come into play and restricted benefit will be payable. This occurs where a claim is made more than three months after a period of unemployment, where the policyholder is working part time, on a career break or is a houseperson.
In these circumstances, the flexibility enjoyed by other policyholders is limited as there must be a minimum deferred period of 12 weeks, a maximum retirement age of 60 and the maximum benefit is £1.250 a month.
Additional benefits of the plan include access to telephone helplines and web-based health management tools to help prevent illness in the first place.
Norwich Union says it is aware of the importance of personal contact at the point of a claim, so it has a team of claims advisers who will complete forms over the phone. Advisers may welcome this plan on the basis of the Norwich Union brand and guaranteed rates, but menu-based protection products from Bright Grey and Scottish provident could provide competition.