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Product matters

There has long been talk regarding an income protection/PA & sickness plan hybrid. Now, finally, one has been launched by British Insurance under the name Safetyfirst.

In truth, the plan is an amalgam because the initial 52 weeks’ payments are under- written by Hitachi Capital Insurance Europe, with the Original Holloway Friendly Society underwriting after this period.

The plan follows a simple design. After 30 days, continuous inability to work, the income is backdated to day one.

The cost is £5 each month per £100 of monthly benefit regardless of age, sex, occupation or smoker status. Benefits are limited to the lower of £12,000 a year or 50 per cent of pre-disability income if lower.

Is this going to be a huge success and increase the take-up of IP cover? Let’s look at the positive aspects. It combines the simple charging structure of the ASU plan with the long-term cover of IP. All occupations are accept- able and smokers and females are not discriminated against.

In the minus column, the plan is restricted to those below age 51 and finishes at age 60. The premiums are reviewed at least once each year. The £12,000 a year limit suggests they are targeting the lower end of the market.

The plan offers instant cover although pre-existing conditions will be excluded if treated within three years of the start date.

Additionally, a 10 per cent declinature rate is anticipated due to medical information disclosed at point of sale.

In summation, Safetyfirst is likely to appeal to occupational classes 3 and 4, particularly those aged between 30 and 50 and is likely to be the first of many such products launched in the coming months.

Alan Lakey is partner at Highclere Financial Services

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