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LV= (Liverpool Victoria) has increased the maximum amount of benefit
for its income protection product by £500 to £1,500.
This means that in the event of a successful claim, you will receive £1,500 a month in benefit – even if you now earn less than that.
This is great news for those people who have experienced a downward turn in income since they applied for cover, as other insurers would typically reduce the benefit on the basis of them being over insured.
Given that income protection is a long-term product it is very common for policyholders to experience earnings fluctuations over the life of the policy. If someone is insured up to the maximum allowable and their incomes fall then insurers will reduce the amount they payout at claim stage, even though the policyholder has been paying premiums for the initial (higher) level of cover.
Drewberry hopes that other insurers will take note and follow the path LV have taken. Those with income protection should contact their adviser after an income fall to ensure they are covered appropriately and not overpaying for their cover.
LV has also introduced a new Guaranteed Insurability Option (GIO). This allows clients to increase their annual benefit by an extra £20,000 - and without medical underwriting.
This is only if they receive a significant increase in salary and is aimed at professionals as they gain qualifications and move up the career ladder. For other lifestyle changes, such as moving home, getting married or having children, the GIO remains at £10,000.
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