The variety given by protection insurance list of options and the firms who are chiefs in this type of insurance. This editorial explains how the client can benefit

Protection insurance menus which offer customers the opportunity to coordinate health and life cover in an all in policy have been around for over 2 decades. Regrettably the early insurance policies did not prove to be very alluring to clients although the idea was right. Administrative savings, a single set of paperwork and direct debit were accepted by both the consumer and the insurer. Nonetheless the benefits given by these menus were counterbalanced by the disadvantages.

The scope of policies provided by the main pioneers, LV (Liverpool Victoria), were not competitive. Independent financial advisers shopped around major providers to put together protective deals for the customer, which significantly lowered the prices found in protection insurance options. The industry has now advanced and a huge amount of new protection policies have been released which have reaped the approvalof many intermediaries.

Scottish Provident was the 1st to develop a winning procedure when it re-launched it’s Self Assurance menu. They were soon followed by Scandia Life, Scottish Equitable Protect, Friends Provident, Legal and General, Liverpool Victoria Life and others are likely to shadow their lead soon.

Three key features are found in the majority of protection menus. Critical illness cover lists a number of stated critical conditions for which the insurance companies would pay out a lump sum. The cheapest option, term assurance, pays out a lump sum if you pass away within a given period of time and nothing from then on. The final option is income protection, which offers a consistent income if long term disability or illness impedes you from working. The menu may offer you redundancy protection, which is usually limited to 1 or 2 years and can also be restricted to the settlement of a mortgage. The major benefit is the flexibility of the products. For example different levels of insurance can be structured for separate sections, so should you make a claim on 1 part the other parts will still stay in force. No additional medical evidence will be needed before major living events, like having a baby, getting married or moving house. These supplementary benefits are known as ‘Guaranteed Insurability Options’.

Different components of insurance may be added on after the close of a short questionnaire and you are still able benefit from the standard insurance policy discounts.

An example of the benefits obtained from a protection menu is shown by a a young man and his wife who selected Legal and General’s Protection Choices menu for mortgage protection insurance. They are paying a joint policy of £31.10 a month for separate life policies and critical illnesses, which have been written on a joint life basis. To begin with they have insurance of £109,500 which goes down as their 22 year homeowner loan is paid off. Life assurance will be paid out if 1 of them departs this life and the insurance policy is terminated, but the one surviving will still be covered for critical illness insurance Life assurance will be upheld for both of themeven if one becomes ill and the policy will pay out on whoever dies first.

If the couple had taken out a standard joint life insurance policy with Scottish Equitable they would only get a pay out on their first claim. While with their Protection Choices insurance policy they are provided with two possible settlements costing only 7 pounds more. Even though employees are sometimes offered income protection with their job they can also cover their mortgage in the same way. Furthermore they might want to take out further critical illnesscover and life assurance not combined with their mortgage. Friends Provident’s  protection menu permits them to do so in a cost effective and straightforward way. The new options based insurance products enable you to save pounds even though you can shop around for single policies and only save a couple of pence.

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