The new My Earnings Insurance product from Cirencester Friendly will, in the “fullness of time”, be more popular than its century-old Holloway products, John Bridge has said.
The director of sales and marketing for income protection specialist Cirencester Friendly said the product aims to provide something different and flexible.
It has also broken away from the investment proposition that has been a feature of the Holloway products since the firm was founded in 1880. The Holloway contract was the first disability insurance provider in the UK.
Mr Bridge called My Earnings Insurance a “revolution” in the society’s product range, as previously only IFAs with the CF30 qualification could advise on the Holloway range.
But this new, “simple” product will be available for all IFAs whose clients do not have adequate income protection.
“We are still wedded to Holloway, but can see that in, say, five years, it will be more popular.”
The product, which has been designed in collaboration with insurance brokers, can last until retirement if needs be.
My Earnings Insurance will help insure a part of a person’s earnings should injury or illness prevent them working.
My Earnings Insurance is an individual income protection contract that will help someone insure a part of their earnings if they cannot work because of injury or illness. The plan will help someone to get back into work, as well as help cover them if they have to take a lower-paid job, and it will help those who have been diagnosed with a critical illness.
For example, if the policy holder is diagnosed as likely to die within 12 months, the plan will pay out an instant six-month lump sum and then normal benefits each month. However, if the client survives, there will be no premium change.
The plan covers employed and self-employed workers, covers the vast majority of occupations, even steeplejacks, as well as hazardous pursuits such as potholing. However, it will not cover professional sportsmen.
Deferrals are permitted from four, eight, 12, 26 or 52-week periods, allowing the policyholder to make the most of any payment given by their employers.
There are choices in the types of premiums paid, and both are at guaranteed rates. A client can choose either:
■ Level premium
■ Annual escalating premium.
■ The maximum that can be insured to begin with is £65,600 a year; the plan will pay out 65 per cent of this, based on the earnings after tax (£42,640).
■ The minimum earnings that can be insured is £6400 a year.
Benefits will continue until:
■ the client returns to work
■ the client stops sending evidence of injury or illness
■ the client is no longer a member of the society
■ the client reaches the end of the contract
■ they no longer meet the MEI claim requirements
■ the client dies
Provider view: John Bridge said: “By learning all the client’s expecations and circumstances, advisers can use My Earnings Insurance to create a tailored income protection product that will suit their needs.”
Adviser view: Sarah Fullaway, former director of Derby-based Oviso, said: “It is good to have another product to recommend, especially with this policy’s unique selling points.
“We’ve not had much of a relationship with Cirencester because of the investment propositions on its Holloway product. But Cirencester has a good claims record and should pick up a lot of business on this product.
“I also really like what it is called. My Earnings Insurance explains the product in layman’s terms. It is a great title that people will relate to.”
Charges: Any product that encourages people to think about protection has to be a positive. The cover it offers is not substantial, but would hopefully be a catalyst to encourage people to take out increased cover.
Verdict: Keeping it simple and badging this in laymans’ terms should make this new policy a win with financial advisers looking to help their clients protect their earnings.
