L&G has tweaked its term insurance plans in the following key areas:
* Term only plans (for mortgage, family or business protection) can now run to age 90 (previously the maximum was age 80).
* The maximum policy term is now 50 years.
* On terminal illness cover, the final 12 months exclusion has been removed. This stopped customers being able to claim if they were in the final 12 months of their policy term. This applies to Term Assurance, Critical Illness Cover, Family and Personal Income Plan and Relevant Life Plan products.
L&G has also produced an infographic setting out reasons to consider offering life cover for longer.
In a separate development, L&G is no longer using Subject Access Requests for medical underwriting, instead using a paper Patient Health Report.
What They Say
Director, Intermediary, Steve Bryan said: "The UK has an ageing population and with 60% of projected household growth over the next two decades being among those aged 65 and over, it is vital that our financial products cater to these changing customer needs.
"With increasing numbers of lenders also changing their mortgage terms, in line with these demographic changes, we need to ensure borrowers of all ages can protect their homes and loved ones for longer. So we will continue to develop and review our products, to help us to pay even more claims and support our customers when they need us most."
What We Say
"One of the odder conditions that has applied on terminal illness cover for most insurers is not paying such claims in the last 12 months of the policy. The logic was that to do so, someone who was given say 11 months to live in the last month of their policy would effectively have had the benefit of term cover almost a year longer than they had contracted to pay for. The fact that only a minority of customers claim on their term plans anyway and, of those, only a small minority would be a terminal illness claim in the last 12 months but not a subsequent death until afterwards, meant that the saving to insurers was small (every penny counts…) but the reputational damage to any insurer exercising this ‘right not to pay’ could be enormous. Sorry about that – a huge sentence on a very small point but perhaps typical of the communication gap that can exist between insurer and insured.
"So thank you L&G for scrapping that exclusion (a much shorter sentence and one we can all understand!).
"L&G has also recognised that people are working longer (often well into the traditional ‘retirement years’) and consequently doing things that mean they need cover for longer – such as protecting a mortgage.
"So, these changes are not of themselves big, but their impact and the philosophy behind them might be. Of course, another alternative would be to have whole life rather than term cover, but that’s not yet an argument every adviser, compliance officer or pundit is happy to accept.
"On underwriting, L&G was a pioneer of using Subject Access Requests (SARs) to gather more medical information on customers at lower cost but, following complaints by GPs, the Information Commissioner has effectively stopped that practice. To some extent that is a pity, as more information and lower costs should have helped keep premiums down, but it also involved GP practices in more work for very less remuneration compared to a GP Report, and the industry needs better relationships with GPs, not worse, so the loss of SARs was perhaps inevitable anyway."