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Revamp leaves tweak spots in plan

Norwich Union Healthcare’s income protection solutions is an individual income protection plan designed for the IFA market.

Highclere Financial Services partner Alan Lakey feels that income protection is crying out for an extreme makeover and advisers are looking for major providers to offer a springboard toward greater sales.

He says: “Norwich Union has revamped its tired income protection product and given it the somewhat jaded title of solutions. Not surprisingly, this product will not excite serious protection practitioners.”

Lakey says this is not a bad product but it fails to hit the various targets that sit enticingly like ducks at a fairground.

“NU has introduced guaranteed rates which were absent without leave some 15 years ago. Like an increasing number of products, the plan can now extend to age 70. Shorter terms up to five years are also available,” he says.

Lakey adds that unusually there is a lump-sum death benefit payable within the initial 12 months of a claim.

Turning to the weak points of the plan, Lakey says: “NU has missed an opportunity to excite the market with an innovative approach. Sadly, it has elected to play safe and tweak existing product design.”

He points out that higher-risk occupations continue to be denied an own-occupation definition. “They are either offered an activity-based definition or denied cover completely,” he says.

Lakey also complains that the premiums are not particularly competitive and NU may be relying on name awareness and reputation rather than innovative design.

He thinks the main competition will come from Pioneer, Cirencester and Holloway friendly societies, along with LV= and Friends Provident. “Newcomer Fortis also has an attractive offering,” says Lakey.

Summing up, he says: “Twenty years ago, NU offered a leading income protection product. Unfortunately, the rejigged plan will not mark a return to the glory days.”

Type: Individual income protection plan

Minimum benefit/minimum premium: No minimum/£10 a month

Maximum benefit: Up to 60% of gross earnings up to a maximum of £180,000, £1,250 a month or £15,000 a year for restricted benefit

Minimum-maximum ages: 18-54

Minimum term: Five years

Deferred period: 4, 8, 13, 26, 52, 56, 104 or 112 weeks

Definition of disability: Own occupation and personal capability assessment

Options: Guaranteed or reviewable rates, limited payment term paying benefit for up to five years, level or index-linked benefits, guaranteed insurability if life event triggered, career break option

Commission: Standard terms – initial 130% of first year’s premium, renewal 2.5% from year five, enhancements available


Suitability to market: Good

Investment strategy: Average

Charges: Average

Adviser remuneration: Average

Overall: ll llllllll

Type: Oeic

Aim: Growth by investing long and short in UK equities with a market capitalisation of less than £1bn

Minimum investment: Lump sum £1,000, monthly £100

Investment split: 100% long and short in UK equities with a market capitalisation of less than £1bn

Isa link: Yes

Charges: Initial 5%, annual 1.5%, performance fee 20%

Commission: Initial 3%, renewal 0.5%

Tel: 0800 294 6837ACCORD MORTGAGES

Suitability to market: Good

Competitiveness of rate: Good

Flexibility: Average

Adviser remuneration: Average

Overall: ll ll llllll


Hugo Thorman

Hugo Thorman believes wrap has barely scratched the surface of its full potential and reckons the market could amount to a staggering £2trillion.


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