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‘Income Protection’ by Royal London


Pros

Cons
New five year payment term option.Royal London is a mutual, which will appeal to some clients.
On top of a good IP product anyway.An opportunity missed to make more changes?
Royal London is a mutual, which will appeal to some clients.More options means a bit more complexity.

The Product

Royal London has introduced a new payment option of five years to its Income Protection plan, which it says makes the cover more flexible.

The five year payment period option is designed for customers who either do not want or cannot afford a full term payment period, but want cover which is more comprehensive than the shorter payment periods it has offered. The new payment period is in addition to the current options of one year, two years and full term.

Other features of the plan include a range of deferred periods; cover up to 65% of the first £15,000, and up to 55% of the remainder up to £250,000 a year; and fracture cover and hospitalisation payment as standard. Customers with deferred periods of 13, 26 and 52 weeks receive a back-to-work payment in their first and second months back at work to help them further financially.

What They Say

Product specialist Christina Rigby said: “Losing an income due to illness or injury is one of the biggest risks people can face, so it’s important to have cover that can be tailored to individual requirements. Our five year payment period introduces additional flexibility and means our Income Protection is suitable for a wider range of budgets and needs.”

What We Say

"This is hardly a major change to Royal London’s IP product, although it is an important one. Already the plan offered one and two year payment period options and that meant it could be seen as a good alternative to an ASU/PPI style product. Those products can provide good value, but long term IP includes a number of advantages over those general insurance plans, not least being that you don’t pay IPT on the premiums and that cover can’t be cancelled by the insurer.

"A five year options takes RL’s plan further way from the ASU model. Arguably, if someone has an illness or disability that goes on for more than five years, they will invariably need to look at their life options anyway. That may include changing career, retiring or working fewer hours. Having full term IP can be a relatively expensive way to cover the risk but a five year option provides almost as much cover in practice, as few IP claims should go on longer than five years.

"Royal London has missed the chance to make other changes this time, but this one change means the plan should appeal to a wider audience than before."