Protection specialist LV= has launched a first-of-its-kind protection product.
Designed as a simplified income protection product, Sick Pay Insurance is designed for people aged 17 to 45 who want to protect themselves financially if they became unable to work due to sickness or an accident.
Individuals can buy the comprehensive cover without any medical questioning. However, there are five professions that are not covered by the product – armed forces, any kind of diver, miners, fishermen or professional sportspeople.
At the moment, statutory sick pay is up to £86.70 per week, paid for up to 28 weeks. However, LV= customers can choose a fixed amount of cover between £500 and £1,000 per month. Once someone has been unable to work for four weeks, the product can pay for up to a total of 12 months and multiple claims can be made – even for the same condition.
The cover is available until age 70 and premiums are guaranteed for the first five years. LV= says Sick Pay Insurance is aimed at those who do not traditionally seek financial advice and are therefore unlikely to take out an income protection product.
MM view
LV= has become the first major protection provider to offer a simplified income protection product, or ‘sick pay insurance’. It is ideal for people who do not want to take out a full income protection plan, but wish to cover themselves in case they are sick or have an accident.
As state benefits are getting harder to claim, this product opens up the possibility of obtaining more than the statutory amount allocated by the government upon becoming unable to work.
The product is suited for those who are looking to get income protection but don’t want to get stung by premiums if they are smokers or depending on their job – the premium price is the same no matter what your social situation or profession is.
The cover is tax-free each month for up to 12 months, the price of the protection is the same up to five years and costs range from £10 to £20 a month.
This product will undoubtedly be the first of many products like this to come to the market. It is suited for everyone and despite being targeted (initially) to people who do not seek an adviser, it could be a suitable product for advisers to recommend for their clients who do not necessarily suit a full income protection package.
