Protection News - August 201129/09/2011
Nationwide launches alternative PPI product, but how different is it?
Nationwide building society recently launched its new Lifestyle Protector product which allows customers to set the level of cover they require for accident, sickness and unemployment cover.
The product is underwritten by Pinnacle Insurance and can be used to cover monthly outgoings. Customers can choose a waiting period of 14, 30, 60, 90 or 180 days although cover is only available for six or 12 months with a maximum benefit of £2,500 a month.
While the product includes £30,000 of life cover as standard and offers greater flexibility than some other similar products, it is essentially an ASU product, or a LASU product, if you like, which perhaps sits between traditional PPI products and proper Income Protection plans.
On the plus side, premiums are priced individually and cover is based upon the inability to carry out your own occupation, expressed here as ‘your normal occupation, or any job which you are reasonably able to do given your experience, education or training’. Likewise day one cover is available and while pre-existing conditions and self-inflicted injuries are excluded, which is to be expected, there are no automatic exclusions for muscular problems or mental illnesses, which combined represent around two thirds of all IP claims. However, as with most general insurance style protection policies the terms and conditions, including the premiums, are reviewable, and cover can be cancelled outright by the insurer, which is not the case with Income Protection.
IP policies, traditionally known as Permanent Health Insurance, can provide cover for a much longer period, typically up until retirement age, with fixed terms and conditions as well as guaranteed premiums, plus added benefits such as rehabilitation and counseling services.
The Lifestyle Protector will be offered on an advised basis in Nationwide branches and on the telephone on a non-advised basis, although as with most bank products it is not available through IFAs.
Is it time for a protection hierarchy of needs?
One of the most debated topics amongst protection practitioners in recent weeks has been whether or not we could all benefit from an agreed high level hierarchy of protection needs, and if so what might it look like.
Needless to say there has been a range of views on what the ideal order might be and whether it should be needs or product based, but pretty much everyone so far seems to agree that overall it could be a good idea.
Term life cover outsells Income Protection by around 10 to 1 – largely because it is much cheaper and much easier to sell – and most would agree there has been too much focus on selling cheap life cover. Not just by the industry but consumers as well – they shop around for life cover, but few look for what they really need.
So could an agreed hierarchy of needs for protection make a difference? Might it get the message across to a few more people that buying (or selling) £9 pounds per month of life cover on its own probably hasn’t protected the family very well?
What might it look like? Here’s one for starters:
1. Income Protection (specifically own occupation)
2. Critical Illness Cover (including life cover and cover for early stage cancers)
3. Life Cover (Term and Whole of Life, depending on the circumstances)
4. PMI (Private Medical Insurance)
5. All others (including other versions of the above)
We would need to get the message across via consumer groups, websites and the media. It would need to be very simple while making some basic assumptions, such as no existing cover, good health and a realistic level of budget.
But what do you think?
• A new online protection distributor ‘The Life Dept’ has launched in a multi-tie with Ageas Protect, PruProtect and L&G
• Friends Life has split the business to differentiate between open and closed business
• Ageas Protect has launched a guaranteed life cover product through supermarket chain ASDA
• LV= paid out 93% of CI and IP claims for the 12 months to June 2011 with a total of nearly £9 million paid out in CI claims, and over £12 million in IP claims
• Direct Line has pulled out of the life insurance market
• Iain Clark has been appointed Managing Director for Protection at LV=
• The first two Protection Review and PFS independent protection training dates were fully booked with a week
• The Financial Ombudsman Service are receiving 900 PPI complaints a day
• The total number of unemployed people increased by 38,000 in the three months to June to reach 2.49 million
• Bright Grey has paid 90% of all critical illness claims in the first six months of the year
Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting
This article first appeared in Mortgage Introducer magazine