With the current pace of product development in the protection market, maintaining a position of market leader requires fresh thinking. Product updates have to focus on providing features that are valuable to clients and not just ticks in the box. Today, LV= have launched updates to their Income Protection and Personal Sick Pay plans which aim to do just that and cement their place as one of the market leaders.

Lump sum benefits to children (Income Protection only)

A unique feature that LV= have added to their proposition is their “Parent and child cover”. LV= will pay six times the monthly benefit up to £25,000 if a child, stepchild or adopted child of the life assured suffers from a list of 54 conditions. This benefit is offered on their Income Protection plan only and not Personal Sick Pay.

The definitions offered are not directly comparable to the cover LV= offer on their CI plan however do cover a number of high incidence child conditions. These include Heart valve replacement/repair and Bacterial Meningitis which have particularly high incidence in a child’s first year of life. Stage 1-4 cancer, Crohn’s disease and Ulcerative Colitis are also included which have high incidence in teenage years.

The conditions listed, are however largely based on the conditions covered for adults and as such many of the conditions are extremely rare in children. It would be good to see the list simplified further with only those relevant to children being included. Also the addition of conditions that have high incidence in childhood often covered in CI plans such as Cystic Fibrosis, Diabetes Melitus Type 1, Hydrocephalus would further strengthen the proposition.

Widening the NHS Sick Pay Guarantee to more occupations (Income Protection only)

In another first, LV= have extended their NHS sick pay guarantee to include dentists and removed the requirement to be directly employed by the NHS. This means that dentists, doctors and surgeons directly employed by a private practice whose sick pay matches the NHS criteria can also benefit from the guarantee. This further cements LV= as the go to income protection insurer for the medical profession amid growing competition. This benefit again, is offered on their Income Protection plan only and not Personal Sick Pay.

Earlier access to rehabilitation (Income Protection only)

Up until now LV=’s rehabilitation support services were only available at point of claim (after the deferment period). For many consumers this would not have been soon enough as they would have been suffering from their injury or illness without the support from LV= for entire deferred period. By amending their terms and conditions, LV= will now be offering rehab as soon as client becomes unable to work and can access from the start of the deferment period.  Therefore helping more consumers return to work faster than they might have been able previously.

Exclusion review periods (Income Protection & Personal Sick Pay)

Whilst understanding that exclusions are sometimes necessary based on the client’s personal circumstances, LV= have looked to make their exclusion policy fairer in the long run. Automatic exclusion review periods for high trigger exclusions (e.g back or mental illness) have been built into their underwriting rules engine for exactly this purpose. If an exclusion is necessary, LV= where possible will only apply this for a limited time period. After the limited period LV= will remove the exclusion if the client has had no further symptoms.

Flexible income assessments (Income Protection & Personal Sick Pay)

A big issue for those with variable incomes is how their earnings are assessed if they are unfortunate to claim on an Income Protection plan. LV= are looking to be more flexible in their approach to both employed and self-employed clients in such circumstances. As a default they will take into account the last 12 months income when considering the maximum benefit, however at the clients’ request they may take into account average income over longer periods of up to 36 months.

A solution to the Universal Credit Conundrum (Income Protection & Personal Sick Pay)

In July this year, clarification was received from the DWP that income from protection plans will be disregarded from means testing benefits if used to cover mortgage payments (see our last insight for more information). Since this clarification insurers have been looking at how they can practically implement solutions that meet the criteria to show ‘intent’ and ‘use’.

With the launch of their ‘Pay my Mortgage’ facility, LV= are the first insurer to respond. The facility is not an extra benefit or product change, but an administrative ‘default’ arrangement. Based on their circumstances at point of claim, the facility allows the policyholder to have some or all of their claim payment paid directly to their lender to fund regular mortgage payments. It only applies to residential mortgages on a client’s main residence which must be within the UK.

This is a well thought through and pragmatic solution to the issue that insurers have faced. LV= believe their approach demonstrates both ‘intent’ and ‘use’, both key criteria for the DWP. As this is not a product enhancement but an administrative arrangement, it could also solve the problem of being applicable to legacy policies.

Overall thoughts

The new upgrades highlight LV=’s standing as one of the markets more innovative Income Protection providers. We are particularly pleased to see a solution to the Universal Credit issues that can work for both new and in force policies and this reflects LV=’s hard work in the issues overall.

The parent and child cover offers wider protection to parents than the traditional carer’s benefit albeit we would like to see more children specific conditions included.

Being a market leader is not about adding more and more features to a plan, but about offering benefits that consumers will be able to use and value. LV= have done just that with their latest upgrade and once again fully deserve the title of market leader for Income Protection.

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