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Scottish Equitable looks to protect

Scottish Equitable Protect

Individual personal protection

Type: Cafeteria-style protection plan covering critical illness cover,
income protection, life cover and permanent total disability cover.

Minimum premium: £10 a month, £120 a year. Life cover &#45 £5 a
month, £60 a year.

Maximum cover: None.

Illnesses covered: Alzheimer&#39s disease, angioplasty, aorta graft
surgery, benign brain tumour, blindness, cancer, coma, coronary
artery bypass surgery, deafness, heart attack, heart valve
replacement or repair, HIV/Aids as a result of a physical assault,
HIV/Aids for named occupations, HIV/Aids from a blood transfusion,
kidney failure, loss of limbs, loss of speech, major organ transplant,
motor neurone disease, multiple sclerosis, paralysis/paraplegia,
Parkinson&#39s disease, stroke, terminal illness, third degree burns.

Minimum-maximum ages: 18-74.

Charges: None.

Options: Life cover, permanent total disability cover.

Deferred periods: 4, 8, 13, 26, 52 weeks.

Charges: Implicit.

Commission: Initial 130 per cent Lautro, renewal 2.5 per cent.

Tel: 0845 6001402.

Company&#39s reputation 6.3

Flexibility 8.3

Types of cover 9.0

Charges 7.3

Commission 7.6

Product literature 7.3

Scottish Equitable has introduced individual personal protect, a
cafeteria-style protection plan that offers critical illness cover (CIC),
life cover, permanent disability insurance and income protection.

Looking at how the plan fits into the market Coates says: “The
flexibility and broad cover offered by this product makes it a very good
competitor for all existing players.”

Lakey says: “This is another of the new breed of comprehensive life
and health protection plans. It is a welcome challenger to Scottish
Provident&#39s self assurance range and to Liverpool Victoria&#39s Mimi

Posner says: “This is a &#39multi-plan&#39 protection product that is
innovative in its structure and breadth of options available.”

Moving on to the type of client the plan is suitable for Lakey says:
“This is for most clients, particularly those who want a complete
protection package beneath a single umbrella.”

Posner says: “It is suitable for any client with the capacity to
understand a layered or modular approach to protection planning.”

Coates says: “This is for anyone looking for broad cover at low cost,
without the unnecessary worry and risk of a unit-linked product.”

Examining the marketing opportunities offered by the product Posner
says: “Because of the relative complexity of the plan, I feel it will
require a reasonable amount of explanation to clients. Accordingly,
the marketing is likely to be limited to bringing the plan to the
attention of clients when discussing a financial review, rather than
any form of presentation.”

Coates says: “There are no additional marketing opportunities
offered by what is another term product. However, the broad range of
cover and the ability to have more than one type of plan or even two
policies on one application is great.”

Lakey says: “There is nothing new here with the marketing
opportunities, but the product allows a breadth of choice.”

Examining the medical and financial underwriting procedures Coates
says: “We have found the underwriting to be flexible and speedy.
However, as with any new area, things out of the ordinary can slow
things down until experience is gained.”

Lakey says: “Two important and welcome aspects are the ability of
the adviser to speak directly with underwriters and the capability for
individual conditions to be excluded without the need for the applicant
to be turned down.”

Posner says: “The levels for underwriting I have seen seem fair and
are reasonably competitive.”

Identifying the main useful features and strong points of the plan
Lakey says: “There is the ability to choose from an extremely
comprehensive menu of options. Particularly useful is the ability to
choose a &#39current costed&#39 premium, which allows initially cheaper
premiums. Scottish Equitable reviews premiums every year, looking
at the age of the client and current premium rates.”

Coates says: “The ability to provide different levels and different plans
and more than one plan on a single application is appreciated by

Posner says: “This is an all-encompassing protection plan that
seeks to cover most needs that a client might have. When seeking to
address protection needs one would normally advise that a client
undertake life protection, CIC and income protection cover as a basic
requirement. This plan offers all of these options, plus a few more,
and all done on a single application and set of underwriting criteria. It
is flexible enough to permit the addition or removal of benefits as a
client&#39s needs alter.

“In essence Scottish Equitable appears to have spent a considerable
amount of time looking at its competitors products and has then
placed them all in one contract that appears to have a wider number
of options than any of the others. The plan is undoubtedly innovative
and should be of interest to any adviser dealing in protection plans.”

Moving on to the disadvantages of the plan Coates says: “In a
rate-driven market the product stands or falls on the cost of cover.”

Posner says: “A number of companies have introduced this type of
multiple object product in the past and have tended to wither and
cease to be particularly successful. It is difficult to work out why this
should be, given that the products incorporated are almost
universally applicable and the ability to tailor a single product to a
client&#39s needs must be useful. Perhaps the biggest drawback is that,
by covering everything, the cost suddenly seems daunting to a client
when going out of a bank as a single payment. The cost is usually no
greater than the combined total of all the other products, but if a case
is going to go off the books when times get hard it tends to be the
multi-plan that vanishes.”

Looking at the reputation of Scottish Equitable Lakey says: “The
reputation of Scottish Equitable in the IFA market is down to its
pension products. It has never had an income protection product
before and it pulled out of the protection market about 15 years ago
before returning with this product.”

Posner says: “This comes from the GRE part of the Aegon stable and
my experience of GRE makes me somewhat wary. Nevertheless, my
experiences of dealing with Scottish Equitable have generally been
somewhat positive and my hope is that it is that ethos and style of
behaviour that will win out. Experience will no doubt resolve the

Identifying the main competition the plan will face Coates says: “This
will come from the well-established players, such as Scottish
Provident, Legal & General, Norwich Union, Swiss Life, etc. Also,
Skandia Life&#39s push into term protection provides interesting

Lakey says: “Competition will come from Scottish Provident, but I
think the nearest competition will be from Liverpool Victoria&#39s Mimi

Posner says: “My feeling is that Zurich probably has a better income
protection contract, but I believe the Scottish Equitable product is
unique in the comprehensive nature of the available cover and the
only competition will flow from the fact that IFAs may choose to
spread the risk over a number of contracts rather than a single plan.”

Assessing the product literature Lakey says: “This is very complex.
While I was ready to read all 40-odd pages, most of my clients
wouldn&#39t bother with it. I also took great exception to the part that says:
&#39If this product was recommended to you by a financial adviser, you
may have a legal right to compensation if it is established that the
recommendation was unsuitable when it was made.&#39″

Posner says: “Bearing in mind the relative complexity of this
comprehensive policy, the product literature must, of necessity, be
relatively lengthy. Given the need to include conditions and
explanations for everything from gift inter-vivos cover through to critical
illness, I thought the product literature was excellent.”

Alan Lakey, Partner, Highclere Financial Services, Michael Posner,
Charter Devon Law & Co, Lee Coates, Director, Ethical Investors


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