British Friendly has added a terminal illness benefit to its protection policies.
The benefit allows members to opt for early payment of death benefits or a bereavement benefit lump sum if they or their partner, spouse or child is diagnosed with a terminal illness.
The lump sum will equate to 26 weeks of their income protection benefit for members who are diagnosed with a terminal illness or 13 weeks of the member’s income protection benefit if their partner, spouse or child (up to age 18) is diagnosed.
The option is available to both new and existing members at no extra cost and forms part of British Friendly’s mutual benefits programme.
There is also the option to have all or part of the income protection benefit paid directly to the member’s mortgage lender.
The provider said the feature was introduced in response to clarification from the department for Work and Pensions that benefits payable from income protection policies that specifically cover mortgage repayments won’t be considered when assessing entitlements to means-tested universal credit.
The DWP clarified the treatment of mortgage protection income under the new system for state benefit assessments in May, in a move that some said could see protection products overhauled.
It confirmed income protection payouts will not be taken into account when assessing means-tested benefit entitlement - provided the policy is specifically intended and used to cover mortgage repayments.
Ian Sawyer, managing director at adviser firm Assured Futures, said: "British Friendly’s income protection proposition is becoming one of the most comprehensive ways a client can cover themselves through one policy.
"It’s so much more than just your usual income protection cover; members and their families are covered for a wide range of eventualities providing greater peace of mind. The mutual benefits programme is taking income protection into another stage of development that makes it more relevant than ever."
Nick Telfer, product and marketing director at British Friendly, said: "This is another part of our drive to ensure advisers’ clients have as much protection through our proposition as possible, both for themselves and their families.
"We have launched a number of benefits over the last two years that complement the core income protection policy, such as care assistance benefit and bereavement benefit, and we are already seeing members claiming on these important benefits."
Joshua Gerstler, financial planner at The Orchard Practice, said: "If the terminal illness benefit helps alleviate concerns some homeowners may have about how direct mortgage payments from the policy may affect their universal credit claims that can only be a good thing."