Holloway Friendly’s new Purely IP product is a simple long term income protection (IP) plan. Unlike its Holloway style plans, it has no investment element to build up a cash value available at retirement and so is cheaper.
The plan is available to UK residents who are aged 18-54 at outset and has a minimum term of ten years. The selected retirement age can be between ages 50 and 65. Key features of the plan include:
- The maximum benefit is the lower of £26,000 a year or 50% of income.
- Deferred periods of 4, 8, 13, 26 or 52 weeks are available.
- An own occupation disability definition is used for the first 104 weeks of claim. After that, the definition changes to an own or reasonably suited definition.
- Escalation is linked to RPI (Retail Prices Index) up to a maximum of 10% a year.
- Premium rates are guaranteed but the actual premium paid increases on 1 January each year. Premium rates do not change because of occupation, gender or for smoking.
- Career break and terminal illness benefits (six months benefit). These must be claimed within one month of diagnosis. On payment of the terminal illness benefit the plan then terminates.
- Medical expenses benefit. This is a lump sum, paid at the company’s discretion, that can be used towards the costs of a specified medical operation or treatment. Typically, we would expect this benefit to be paid where that might lead to a shorter claim period.
Exclusions are fairly standard for this type of plan. Commission is 140% initial for online applications (or 125% for paper applications) with 3% renewal commission. The commission clawback period is 36 months.
What They Say
Sales and marketing manager Matthew Manser said: “Most Holloway income protection policies include an investment element but this requires an adviser to have investment permissions in order to sell them. In response to feedback we have taken that element away, so any adviser with insurance permissions can now provide their clients with the insurance they need to protect their income and their families.”
What We Say
"We hope that the Retail Distribution Review will treat Holloway plans kindly as, fundamentally, they are 'a good thing'. Meantime, Holloway Friendly (as many other IP providers already do) has launched an alternative in the form of a simple pure protection plan that will appeal especially to females, smokers and those in some higher risk occupations who do not want large amounts of cover. When shopping around, remember though that premiums will rise every January for all – so think of it as another form of low start product. Be careful too if a client is diagnosed terminally ill - if they do not die within six months they would be worse off claiming the terminal illness benefit than just claiming normally."