Type: Individual income protection plan for professionals and other low-risk occupations
Minimum benefit/minimum premium: No minimum/£1.05 for every £100 of monthly benefit required
Maximum benefit: 40% of earnings subject to a £100,000 maximum
Minimum-maximum ages: 16-60
Minimum term: Five years
Deferred period: One day or one, four, eight 13, 26 or 52 weeks
Definition of disability: Own occupation
Options: Index-linking, increasing insurance option, premium waiver. career break premium holidays
Commission: Paper applications 130% Lautro, online applications 140% Lautro
Tel: 0845 603 8085
Pioneer Friendly Society’s professional income protection plan is designed for professionals and people in low risk occupations. It has no standard exclusions, its age-costed premiums are guaranteed and financial underwriting is undertaken on application, not at the point of claim. To keep premiums affordable, premium rates will vary between men and women and between smokers and non-smokers.
Highclere Financial Services partner Alan Lakey complains that the income protection world has been moribund for some time with little innovation or sparkle. He feels this product may be the catalyst for a revival in the fortunes of income protection.
“This innovative product is aimed solely at Class 1 occupations. Unlike a standard income protection plans it provides a guaranteed payout which is enabled by undertaking financial underwriting at the outset rather than at the claims stage,” says Lakey.
Lakey likes the fact that the age-related premiums are guaranteed not to deviate. He points out that unlike typical friendly society schemes, smokers and females pay higher premiums than non-smokers and men.
“Premiums are extremely competitive at younger ages and rise inexorably with age. The premium becomes comparable with alternative guaranteed rates after 15 years, indicating that this product is a winner,” he says.
Lakey observes that benefit is limited to 40 per cent of previous income, which he says is less generous than other income protection plans. However, PII D benefits – benefits in kind from employers – and dividends are included, while state benefits are ignored.
Lakey feels there is very little to dislike about the Pioneer product because unlike most income protection plans, it is designed around consumer needs and not the underwriting requirements.
However, he feels the product literature could be better. “Disappointingly, the literature is somewhat stolid and fails to highlight the innovatory aspects, although this can be countered by adviser ebullience,” he says.
Lakey concludes: “While this product is unique, it will face competition from the reasonably priced Cirencester plan as well as Friends Provident and Liverpool Victoria with their guaranteed premium plans.”
Suitability to market: Good
Premium rates: Good
Adviser remuneration: Good