Holloway’s new hybrid plan pays up to 60% of gross income (up to a maximum cove r level of £120,000 a year) if the individual is unable to work because of one of the specified critical illnesses. The benefit is paid monthly. A choice of 4, 13 and 26 week deferred periods is available and the plan can run to any age between 50 and 70 inclusive. The maximum age at outset is 54.
Benefits can be increased each year in line with increases in the Retail Prices Index (RPI) up to a maximum of 10% a year. Exclusions are fairly standard for IP plans. The policy also includes proportionate and rehabilitation benefits, and a career break option (suspending cover up for to 6 in any 12 month period and up to 24 months in total). A terminal illness benefit (which must be claimed within a month of diagnosis) pays six months’ benefit on being diagnosed, but the plan then ceases with no further benefits paid. A discretionary lump sum (Medical Expenses Benefit) may be paid and used towards the cost of a specified operation or treatment if it is medically likely to lead to faster recovery.
The incapacity definition is: ‘The total inability to perform all the essential duties of your own occupation and that you are not following any other occupation for profit or reward.’
The critical illnesses are: cancer; coma heart attack; Alzheimer’s disease; aorta graft surgery; benign brain tumour; blindness; coronary artery bypass graft; deafness; heart valve replacement; HIV; kidney failure; loss of speech; loss of hands or feet; major organ transplant; motor neurone disease; multiple sclerosis; paralysis of limbs; Parkinson’s disease; stroke; terminal illness; third degree burns, and traumatic head injury.
There is no limit to the number of claims that can be made. Members also have access to the Holloway Members Assistance Program, giving information and assistance across a wide a range of health and non-health situations.
What They Say
Sales and marketing director Mat Manser said: “While critical illnesses are life limiting, they are less often life ending any more. We have a continued need for people to have a regular income while they are sick, to help with their usual day to day needs such as childcare, school and food bills and paying the mortgage. This policy provides another fantastic option for advisers while discussing protection with clients. We believe that taking away someone’s financial concerns gives them one less thing to worry about and will help them get back to full health sooner.”
What We Say
"On the face of it, a product that combines the best elements of income protection and critical illness insurance should be a winner. However, this plan (and others of a similar nature also now being marketed) pretty much does the opposite.
"Compared to conventional CI, it pays an income rather than a lump sum and only if the customer also cannot work. So it would pay out on fewer claims than a conventional CI policy would.
"Compared to conventional IP it only pays out if the cause of not being able to work is one of the specified critical illnesses. In other words, it would not pay out on the most common causes of IP claims – mental health and musculoskeletal conditions - or if the illness or disability was caused by any other medical condition (critical or not) or if the customer did not meet the specific definition for the named critical illness in the policy T&Cs.
"So why buy it? The only reason can be to get much lower premium rates. That said, if someone cannot work because of one of the specified critical illnesses, then not only would this plan pay out (and perhaps for many years), but the customer should have paid a lot less in premiums up to the time they claimed. But that looks to be a much greater risk for the customer. In short, I can’t see this concept appealing more than conventional CI and IP plans – but can see a lot of reasons why it wouldn’t."