ProtectionJun 21 2016

Scottish Widows reduces CI and life minimum sum assured

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Scottish Widows reduces CI and life minimum sum assured

Half of the UK’s mortgage holders have no life cover in place and only a fifth have a critical illness policy, according to Scottish Widows research.

The provider commissioned YouGov to interview a total of 5,161 adults at the end of January., revealing the extent of the protection gap, something which it intends to help close with updates to its Scottish Widows Protect proposition.

Launched in October, it includes life cover, life with critical illness cover, critical illness cover, whole of life cover and relevant life cover, for both individuals and businesses.

After work with advisers, Scottish Widows has reduced the minimum sum assured on life insurance and critical illness cover from £100,000 to £25,000.

This should open up more opportunities for mortgage-related adviser business, such as remortgaging to release capital, further advances and second steppers who are taking a modest increase in loan, a spokesman for the provider stated.

The SWP range has been added to the firm’s Webline portal, allowing even more advisers to access the menu-based product.

A ‘price lock guarantee’ has been introduced, so customers are able to budget with the knowledge that the monthly premium they’ve been quoted at the outset of a mortgage application will not change until the policy goes in force (for up to 12 months), including any delays in mortgage exchange or underwriting.

The only exception to this is if the client is rated due to medical underwriting.

A joint life option has also been introduced.

Johnny Timpson, protection specialist at Scottish Widows, said: “None of us want to think about the worst, but our research findings show that there are an alarming number of mortgage holders who could face a significant financial struggle in the event of an unexpected loss of income.

“These developments add weight to our commitment to offering well-rounded, menu-based protection solutions which suit the mortgage intermediary market just as well as the protection intermediary market,” he added.

peter.walker@ft.com