This product builds on Holloway’s Purely IP plan, which was launched in March 2011 (and we reviewed in June’s issue). It adds a day one deferred period, which means that after three days off work, clients can claim (as long as they have a doctor’s certificate), with the claim backdated to day one. This option is particularly valuable to some self-employed people and others who do not qualify for any other sickness benefits.
The plan itself offers no occupational, gender or smoker loadings and has guaranteed premiums. Unlike true Holloway plans, there is no investment element.
The plan has an initial own occupation disability definition and there is a choice of retirement ages, from 50 to 65 (with restrictions for some occupations). After 104 weeks of claim, the disability definition changes to an own or reasonably suited occupation one. The plan is available to those aged 18 to 54 at outset. Maximum benefit is £26,000 a year, or £500 a week, up to a maximum of 50% of pre-disability income.
Benefits can escalate in line with RPI (Retail Prices Index) up to a maximum of 10% a year. Premiums are waived after 52 weeks of claim.
Underwriting is big T, which means no medical question on the application form, but a follow-up conversation to set the underwriting terms.
Although premiums are guaranteed, they will go up each January in line with the new age attained. This effectively means lower premiums initially, rising later in the policy’s life.
A male in a class one occupation age 30 now and retiring at age 60 would pay an initial premium of £28.49 for a 13 weeks deferred plan or £38.60 for 4 weeks deferred. However, for a day one deferred period, the initial premium is £71.54 a month.
What They Say
Sales and marketing director Mat Manser said: “We are launching Purely Day One in direct response to the feedback we’ve received from our IFAs and brokers that their clients need a policy on which they can claim as soon as they are ill and unable to work. This policy enables clients to claim in this way, and also provides a raft of other benefits focused purely around the clients’ needs for income protection if they should become unable to work through illness or accident.”
What We Say
"Adding a back to day one deferred period extends the appeal of this plan as many (especially lower paid) workers are unable to afford any time off work and the UK’s economic woes since 2007 have only further exacerbated that.
"However, that can be very costly – for someone aged 30 now, it more than doubles the initial premium compared to a 13 week deferred period. That said, income protection remains a very affordable product for most people, even if sales volumes suggest otherwise."