Burgesses’ loanprotectionplus
HEALTHCARE INSURANCE REPORT - 1ST JUNE 2004
Burgesses’ new plan is underwritten by Compass Underwriting on behalf of certain underwriters at Lloyd’s, with death and critical illness benefits underwritten by Sterling Life.
The plan is designed to protect non-mortgage loan repayments for up to five years. It pays out on:
• Death –from any cause
• Surviving for at least 28 days after being diagnosed with or undergoing cancer; coronary artery by pass surgery; heart attack; kidney failure; major organ transplant; multiple sclerosis or stroke.
• Disability – being unable to work.
• Unemployment
In the case of the life and critical illness benefits, the outstanding loan will be repaid to the lender. Otherwise, the monthly benefit insured will be payable until up to the end of the policy term.
There is an initial 120 day exclusion period for unemployment benefit and a 30 day waiting period before disability or unemployment benefit is payable. Pre-existing conditions are excluded and policyholders must be aged between 18 and 60, actively working, and living permanently in the UK, Channel Islands or Isle of Man. Cover ceases if the loan is repaid.
Exclusions are fairly standard for this type of policy although back-related and mental conditions do require a specialist’s confirmation that the disability prevents the insured from working.
Commission is 20% of each premium paid.
Comment: Non-mortgage loan protection is generally over-priced and the cover provided is not always the best either. That makes it a lucrative market for lenders and retailers – who can earn up to 80% commission on such plans – but rather poor value for many borrowers.
Intermediaries rarely sell this type of plan but provided they know when a client takes out a loan, this plan should enable them to undercut high street retailers. The plan covers disability, unemployment, death and critical illness and, though premiums are still costly, the cover is quite good and the plan does meet a need. Most people are still likely to be better off having full long term income protection but if this is the type of cover they want now, then Burgesses’ plan is worth a second look.
