This new plan from Ageas Protect is currently available through Transact for an initial user group of 30 firms, with a full rollout planned for 2015.
The plan is a life insurance contract where the sum insured automatically takes account of selected platform assets. For example, if the client wants to leave £700,000 to beneficiaries and their chosen platform assets are currently valued at £500,000, the sum insured they pay for is £200,000. If their platform assets grow to £600,000, they only need to buy £100,000 of cover. Conversely, it their assets fall in value to £400,000 they need to buy £300,000 of cover.
Cover is arranged through an online portal developed by Integrated Protection Solutions Ltd (IPS), which is accessed through Transact Online (TOL). The IPS portal has been developed with Swiss Re and uses simple health and lifestyle questions to assess the customer. It is expected that the majority will be offered immediate cover without any referral.
Customers must be aged 18-69 at outset and cover lasts to age 75. The minimum sum insured is £20k and the maximum is £5m. Premium rates are guaranteed and based on actual age, with cover calculated daily and premiums payable monthly. Clients can choose which investments to link to the plan. Only single life cover is available, minimum term is five years and cover expires at age 75. Cover can be increased annually up to 10% a year, subject to a maximum overall increase of 50% (or £250k if lower). The plan also includes access to the Best Doctors service.
What They Say
Ageas Protect’s Steve Casey said: "This is an exciting and innovative approach to offering protection to clients via their investment platform. The ability to write protection that sits alongside a client’s investment portfolio gives advisers the opportunity to offer their clients flexible protection to meet their financial goals, whether that is planning for their retirement or paying their kids’ university fees."
What We Say
"Platforms are a great way to assemble many of your investments under one umbrella which, if nothing else, makes administering and valuing them much easier than holding each one individually. Moving money around is also a lot simpler and more efficient. The downside is the extra cost and the fact that only some investments can be held by the platform.
"That said, platforms are very popular, especially with larger investors and providers continue to develop their services. One relatively new service is life insurance. The theory is simple – you want to leave a set sum to beneficiaries, yet what you actually leave is dependent on how the markets move. Die at the wrong time and your kids get less. If you had a life policy that took account of those market fluctuations you could both meet your estate planning target and also (because the value of your investments should rise over time) save money because you only pay for the ‘gap’ – the difference between your chosen sum insured and what your combined investments are worth.
"The proposition is not yet fully integrated – the value of your home and some other investments is not taken into account for example – but it is a helluva lot better than having non-integrated life cover.
"Ageas Protect and Transact are sensibly rolling out this new product over time and their proposition looks to have the advantage of both simplicity and sensible upfront underwriting. If you use the Transact platform and want life cover, the concept is well worth looking at.
"One minor gripe – Ageas Protect is another insurer to use the words ‘sum assured’ when ‘sum insured’ would be clearer. We would have liked more information on the use of trusts too (to be fair, we may not have seen all of the literature)."