Colonial, the international financial services provider, has entered the UK’s critical illness market with an innovative new product.
The Serious Illness Plan is the UK’s first joint life and serious illness scheme with the option to repurchase life insurance cover, or “Buy Back”, after the payment of a critical illness claim.
The cover is available at the usual rates for a client’s age and not increased by medical history. But the policyholder must survive two years from the date of claim to enable them to “Buy Back”.
Max Wright, head of IFA sales, commented: “The OFT recently highlighted a failing of dual critical illness and life cover contracts which pay out on the first event, either death or critical illness. This means that many policyholders who survive a serious illness are often left unable to obtain life cover or have to pay exorbitant rates. To be penalised like this causes anxiety and stress when a person least needs it.”
“Colonial’s optional death benefit buy back is extremely popular in Australia, and we expect it to be equally popular in the UK,” Wright added.
Colonial’s scheme includes:
• Core definitions approved by the IFAA.
• Available as a “stand alone” plan or with death benefit on an “acceleration” basis.
• An element of cover for children is included.
• Premium waiver is automatically included.
• The cash lump sum is paid free of all UK personal taxes.
Wright added a cautionary note to other companies considering following Colonial’s lead: “We were worried that competitors would follow us but with not enough claims experience. They shouldn’t think that it is easy. Colonial has immense underwriting skills.”
Colonial was established in Australia in 1873 and has been a direct IFA provider in the UK for eight months. It sees the introduction of the Serious Illness Plan as an reaffirmation of its commitment to IFAs following the launch of the profits investment bond and pension last August.