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‘Plan and Protect’ by Scottish Widows


Simple to understand and buy.Does not include some major traditional CI conditions or some other benefits, such as guaranteed insurability options.
Fast application process.Not available through IFAs (yet?).
Available through the banks’ branches so could further expand the reach of critical illness insurance.By not including major critical illnesses, the risk is effectively passed to the customer, who may only understand that fully if they go on to suffer one of those conditions.

The Product

Scottish Widows says its new Plan and Protect plan is an innovative new life and critical illness product range designed to make it easier for homeowners to protect themselves and their families.

The plan has a simple application process and adopts clear language. There are just seven health and lifestyle questions, and it only takes 20 to 30 minutes to be covered for up to £500,000.

The plan is available as standalone Life Cover or Body (critical illness) Cover, as well as combined Life and Body Cover. After being trialled across one of the Halifax branch network regions since October, it has now been rolled out across the UK to mortgage and protection advisers in Halifax, Bank of Scotland and Lloyds branches.

The plan’s key product features are:

* Life Cover: Pays a cash lump sum if the customer dies.

* If decreasing cover is chosen to protect a repayment mortgage, the mortgage interest rate used is 8%.

* Body Cover: Pays a cash lump sum if the customer is diagnosed with one of the illnesses covered. The conditions covered are: aorta graft; bacterial meningitis; benign brain tumour; cardiac arrest with defibrillator; CJD; coronary by-pass; dementia; Devic’s disease; early stage cancer; encephalitis; heart attack; heart valve repair/replacement; invasive cancer; Kennedy’s disease; kidney failure; loss of hand/foot; major organ transplant; motor neurone disease; multiple sclerosis; open heart surgery; paralysis; Parkinson plus syndrome; Parkinson’s disease, stroke, and traumatic brain injury.

* Available to customers from age 18 and under 60 with cover up to age 70

* Customers can apply for up to £500,000 cover per product.

* Premiums start from £5 per month and are guaranteed.

* Five clear yet broad definitions covering key reasons for claim – with an early cancer payment also available (which pays £5,000).

* Fairer Finance accredited terms and conditions.

What They Say

Head of protection underwriting and claims strategy, Scott Cadger, said: "Plan and Protect is the first step in our journey to help transform the protection market, leveraging Lloyds Banking Group’s reach and scale and designed to meet the existing and future needs of a changing UK population. "We’ve created a straightforward product, transparent terms and conditions and a simple process that provides an instant decision to every customer, while providing value for money cover. "Our mortgage will often be the biggest financial commitment we’ll ever make, so having the right cover in place means customers can trust us to be there for them and focus on their health and wellbeing – instead of worrying about keeping a roof over their heads."

What We Say

"Scottish Widows has designed this product for Halifax, BoS and Lloyds advisers rather than IFAs, and the focus has been on simplicity and ease of purchase. From a customer’s perspective too, both are welcome.

"However, the downside is that some usually included conditions are not covered. CI Expert’s analysis notes Scottish Widows has not included such staples of CI policies such as blindness, cardiomyopathy, coma, deafness, lupus and third degree burns.

"From a customer’s perspective, that is puzzling and I wonder whether including them would have added much to the sales process or cost. But by excluding them, Scottish Widows is effectively passing the risk on to the customer. It’s true that the vast majority of customers won’t get those conditions and also that the vast majority of all CI claims across the industry are not for these conditions. But, a critical illness policy that is less than comprehensive only works if the customer knows the risk they are taking on and is happy with that. Why would they knowingly do that? To save time – perhaps. To save money – is that really so important?

"Other traditional benefits not included are terminal illness cover, guaranteed insurability and children’s cover.

"It’s hard to see why a customer would choose to not have all these benefits and most advisers would also be uncomfortable recommending such a policy, so this may well remain a non-IFA product. That said, Scottish Widows offers other CI plans more suited to advisers needs, so not having access to this product won’t be an issue for many.

"Overall, while I can understand the thinking behind the plan, question marks remain over what that means to the customer. But, if it means more people have life and CI cover – especially for their mortgage – than otherwise would be the case, is that even more important?"