Type: Online menu-based individual protection plan comprising core level, decreasing or index-linked life cover and serious illness cover, with optional income protection, disability cover and unemployment cover
Minimum-maximum ages: 16-75
SERIOUS ILLNESS COVER
Minimum premium/cover: £8 a month/£10,000
Minimum term: Five years
Maximum cover: Initial £500,000, £1m in special circumstances
Conditions covered: Primary serious illness cover – nine cancer-related conditions, 13 heart and artery conditions, 23 stroke and nervous system conditions, six gastrointestinal conditions, seven connective tissue disease conditions, seven urogenital tract and kidney conditions, seven respiratory disease conditions to age 70, accidental HIV benefit, eight musculoskeletal trauma conditions, four eye conditions to age 70, two ear conditions to age 70, major organ transplant, five conditions of permanent disability; additional conditions with comprehensive serious illness cover – two cancer-related conditions, 16 heart and artery conditions, seven stroke and nervous system conditions, one gastrointestinal condition
Options: Single or joint life, whole of life or fixed term, guaranteed or reviewable premiums, serious illness cover for children, disability cover, waiver of premium on incapacity, waiver of premium on serious illness, waiver of premium on death available on joint life plans but not on life cover only, minimum protected account, protected life cover, upgrade to PruProtect plan
Minimum sum assured/minimum premium: £10,000/£8 a month
Minimum-maximum term: Five years
Options: Single or joint life, whole of life or fixed term, guaranteed or reviewable premiums, waiver of premium on incapacity, waiver of premium on serious illness, waiver of premium on death available on joint life plans but not on life cover only, upgrade to PruProtect plan
Commission: Subject to negotiation with enhancement of up to 15% through Vitality programme
PruProtect’s essentials plan is an online version of the existing PruProtect plan. Some features of the existing plan, such as automatic children’s cover, guaranteed insurability options and immediate cover, have been removed to make the plan more affordable. The plan follows the original PruProtect plan in paying out 10 to 100 per cent of the sum assured depending on the severity of conditions. It also provides access to the Vitality incentive programme, which rewards policyholders for healthy lifestyles.
Considering how this plan could be useful for IFAs and their clients, Highclere Financial Services partner Alan Lakey says: “PruProtect currently stands alone in offering a severity-based serious illness contract. Essentials builds upon the current product range by offering a more basic version, which provides for a 10 to 15 per cent premium reduction.”
Lakey notes that these premium reductions have been made possible by the removal of some features of the existing PruProtect plan. He observes that the new plan has no guaranteed insurability options and does not include automatic cover for children. Instead, severe illness cover is an optional extra.
“Plan holders can benefit from the Vitality points discounts and other benefits but, unlike the more comprehensive version, they will not be able to secure future premium reductions,” he says.
Lakey thinks that most protection experts consider cost as one of the less important determinants of a quality plan. “However, surveys indicate that the majority of advisers lean towards the cheapest product. PruProtect has cleverly placed essentials among the cheapest plans and this should translate into an increasing market share,” he says.
Highlighting the less attractive features of the plan Lakey says: “There isn’t anything to dislike about the plan. Nevertheless, its strength is also its weakness. The complexity of a plan offering so many additional conditions and applying levels of payment based on severity may be lost on advisers who cannot be bothered to properly assess competing policies,” he says.
Lakey feels that critical illness protection plans are complex, and that the PruProtect plans are more complex than most. “Unless advisers explore the details and note the differences, they may not feel confident enough to use the plan. The current round of PruProtect workshops may help resolve this,” he says.
Scanning the protection market for possible competitors, Lakey says: “At the quality end, the main competitors will be Fortis and Bupa, with Aviva and Friends Provident scoring with those advisers majoring on cost.
“In reality, essentials is not really comparable to any other critical illness plan due to the breadth of cover and the fact that differing levels of illness translate into payouts varying from 10 to 100 per cent of the sum assured.”
Lakey thinks that the decision for advisers and clients is whether a plan covering around 35 conditions and paying out 100 per cent of the sum assured is better than one covering 154 conditions where the size of the payout is dependent upon condition severity.
Summing up, Lakey says: “Protection seems to be regaining importance in the eyes of advisers who previously were blinded by the wealth-manager title. This rediscovered dedication to protection should feed through to a greater emphasis on product appraisement and any worthwhile analysis must surely increase the take up of PruProtect plans.”
Suitability to market: Good
Premium rates: Good
Adviser remuneration: Good
Suitability to market: Good