ProtectionSep 20 2022

Are menu plans a clean solution for the CI or IP argument?

  • Describe how menu plans work
  • Identify some chief difference between them and individually held policies
  • Explain some key facets relating to the case study
  • Describe how menu plans work
  • Identify some chief difference between them and individually held policies
  • Explain some key facets relating to the case study
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Are menu plans a clean solution for the CI or IP argument?
(Will Esayenko/Unsplash)

As our lives are already bombarded with flexibility and convenience, it is only right that protection should follow suit. Clients should be able to use different parts of their plan so that dependents within their household could also be covered.

For example, the benefit of inflation-linking income protection means that the income from the policy can meet rising day-to-day living expenses, while the lump sum from a critical illness policy could cover more immediate concerns regarding paying off a mortgage.

Budget options are now more important than ever

The latest findings of the LV Wealth and Wellbeing Monitor found that 38 per cent of UK adults had worried about money in the past three months.

Rising inflation and the unexpected leap in energy costs has affected the finances of many families, as 9 per cent of people surveyed were worried about the impact of interest rate rises on their mortgage repayments.

It makes sense for menu plans to eventually become the go-to solution.

Indexation, where premiums are linked to inflation, can make a big impact on income protection as the client’s income may need to withstand higher household bills in the future. By using a menu plan, advisers can choose to add a mix of inflation-linked or fixed cover options to best address their concerns.

LV’s longest running income protection claim started in 1987, paying out £93 a week. The claimant was diagnosed with epilepsy at 27 after suffering a brain haemorrhage, leaving her unable to work.

As index-linked cover was put in place, the weekly payout has risen to more than £270. In total, £390,000 has been paid out to the claimant over 36 years and the policy will continue until the end of the term in 2023.

The example above shows that having a mix of combined and single policies can give people the support and breathing room that they need to overcome a financial life shock. Conditions such as cancer are clearly debilitating and can require extensive time off work.

There are many benefits in having a menu plan as the various covers can snap into action during different life stages and situations.

Advances in portal technology and interactive underwriting systems have enabled advisers to mix and match multi-benefit solutions from different providers, creating personalised cover for their clients.

It makes sense for menu plans to eventually become the go-to solution in many circumstances, as product design and technology continues to improve, making the advice journey more efficient.

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