Pioneer Friendly Society is targeting people in occupation classes
three and four with pure protection, a new individual income
The society's existing income protection product has a savings element that is payable on retirement that Pure Protection - as an unregulated product -does not have. Pioneer says income protection has traditionally been targeted at class one occupations. It sees a gap in the market for an income protection policy with short-term deferred periods, as people in lower-class occupations are likely to have less money to fall back in if they are unable to work through accident or illness.
At the outset, policyholders choose a retirement age between 50 and 65 providing this allows the plan to run for at least five years. Premiums must be made for at least three months before a claim is valid, but payment can take place from day one after policyholders have been medically certified as unfit to work.
The plan has an own occupation definition of incapacity, which runs for 52 weeks, after which the plan switches to a suited occupation definition. The minimum benefit is £78 a year while the maximum is £37,440 a year.
Bupa's Lifestyle and Income Protection plan is a similar product but it allows cover to be extended beyond retirement, which the Pioneer plan does not. However, the Pioneer plan does not consider factors such as sex and smoking status when calculating premiums so its rates for women and smokers are more competitive.
A 30-year-old non-smoking housewife who requires £413.40 in benefit on an index-linked basis with a retirement age of 55 and a deferred period of three months would pay £16.22 with Bupa and £10.07 with Pioneer Friendly Society.