Last month LV (formally Liverpool Victoria) made some significant changes to both their income protection and critical illness insurance offering. This page sets out some of the key changes made. It is also worth reading our LV Income Protection review.
Changes to income protection plan
LV has improved their income protection (IP) product to include a £1,000 benefit guarantee as well as the maximum age for cover to expire to 70 years. People are living longer and working until they are older today and this reflect that change.
The maximum percentage of salary covered has increased to 55% and the occupations covered are mostly on an “own occupation” basis (nearly 80%). This includes surgeons, doctors, teachers, dentists, midwives, nurses and so on. In the past these occupations have only been able to be covered under the definition of “any occupation”.
The upgraded LV income protection product now also offers one and two month deferred/excess periods for all occupations together with the three, six, twelve and twenty-four month deferred period options which were already available.
They now allow claims of 55% of gross income – this was previously 50%; which closes the gap between the monthly benefit paid and the total net salary previously earned. The same applies to personal income in the case of self-employed IP; this is also 55% in respect of a claim, and average earnings are taken over a three-year period – this was only one year previously.
Critical illness cover also improved
With regards to critical illness and mortgage term assurance; the LV sum assured previously decreased annually at the end of each policy year. Now this insurance will decrease monthly which aligns it more closely to the lowering amount due in the characteristic capital and interest repayment mortgage.
Where life insurance will pay out a lump sum on the death of the insured, critical illness and income protection cover pays out in the case of being injured or diagnosed with an illness. These plans provide a tax-free safety net which can be used to cover expenses during times of illness or injury.
The need for illness protection
Illness is an inescapable fact of life and although we are not all likely to get critically ill; one in two-hundred people are getting cancer every year – this means 293,000 new cases of cancer diagnosed annually.
Despite the fact that illness and death are facts of life, and over a third of people will develop some form of cancer in their lifetime – not even half of the working population of the UK carries life insurance. Three quarters have no critical illness cover and only 17% hold income protection; this is unfortunately, another sad fact of life.
Nationwide research found that people are more likely to insure their car or their mobile phones than they are their life or their income. Insurance on property or possessions can be important but so too can covering health and family income.
While you cannot be replaced, your income can be insured, and you can continue to provide for yourself and or your family, even in the face of serious illness, disability or death.