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Protection experts say LV=’s simple IP plugs a hole

Protection experts believe LV=’s new simple income protection plan will be a niche product for those who find it hard to get standard income protection or want to insure small amounts.

The product is designed for customers aged between 17 and 45 and covers consumers against not being able to do their job, except if they are armed forces personnel, divers, miners, fishermen and professional sportspeople.

The cost is based on the number of hours they work and not on their occupation. For customers who work between 16 and 29 hours, they can have £500 cover costing £10 a month.

People who work more than 30 hours a week can choose cover between £500 and £1,000, costing between £10 and £20 a month.

No existing sick pay, insurance pay-outs, or any state benefits are paid out so any claim will be paid in full as long as the person was still working the number of hours the claim was based on.

Once someone has been unable to work for four weeks, the product can pay out for a total of 12 months and multiple claims can be made for the same condition, as long as the customer has not suffered from the medical conditions in the two years before applying.

LV= has no immediate plans to offer the product through intermediaries at present.

Axxis Financial Planning director Owen Wintersgill says: “I think this product will plug a gap in the market, insuring people who have trouble finding insurance -I can’t see standard clients going for this product. But I do think there is room for a product of this type.”

Highclere Financial Services partner Alan Lakey says: “It will be used for people who want IP but can’t afford the proper one, or for people who only want to cover a smaller amount like a mortgage. There are plenty of people who want that but let’s not get carried away. If you want proper cover then you, then you need to do it properly.”

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