Wealth Protect is a daily renewable term policy offered to Nucleus customers. Initially, the plan is available to 11 member firms only, but will then be rolled out to all Nucleus wrap users later this year.
In effect, Wealth Protect is a new way to buy life cover. Customers select a target portfolio value and the difference between that and the value of their platform assets becomes the sum insured. Only that sum is insured and so the insurance policy payout can vary daily, as the value of the customer’s platform investments fluctuates.
The plan enables customers to target leaving a specific sum to their beneficiaries on death, rather than see that subject to the market fluctuations of their investments. This means they have much more control over how much their death estate is worth.
For example, a customer may set a target portfolio value of £2m and has an investment portfolio valued at £1.5m. If their investments are now worth £10,000 more than they were yesterday, they now need £10,000 less life cover (£490,000 rather than £500,000) and, as only that day’s risk is insured, the actual premium should be as low as it can be. Assuming the value of their assets rises over time, the sum insured necessary will fall and, as the underlying premium rate rises with age, less cover should be needed when it is more expensive to buy.
The plan is available to UK residents aged 18-70 at outset and cover can last for any period up to age 75. Although the sum insured fluctuates daily, premiums are payable monthly. Cover can be increased by up to 10% a year without fresh underwriting, in certain circumstances. In effect, premium rates are guaranteed at outset, although they rise with age. Maximum sum insured is £5m.
What They Say
IPS chief executive Steve Mendel said: “In recent years the wealth adviser has evolved beyond recognition in response to the RDR and to clients’ changing needs. Meanwhile the UK protection market has not changed, and is still built around a fixed cover offering, set through one-off transaction-based advice. The traditional protection market now looks outdated. The IPS vision is to create an RDR-compliant protection business which supports the wealth management adviser by seamlessly integrating a client’s wealth objectives with their protection needs. We aim to make the technology simple, personal and engaging for both the financial adviser and customer."
What We Say
"A number of wrap platforms and others are likely to offer similar wholesale or top-up life cover arrangements over the coming months but Nucleus looks to be the first. For those who want to pass on a fixed sum to beneficiaries, this can be an excellent way to buy life cover and should be the cheapest solution too.
"However, this product only runs to age 75 (most clients will die after that age), only platform held assets are taken into account and if using a trust, the IHT benefits will go up and down in line with investment value changes. The bottom line is that some will find this a very appealing new option, but its appeal may be less wide than at first appears."