Increasing Critical Illness Extra

A plan designed to protect the sum assured against inflation, financially protecting the life assured. It pays out a lump sum in the event of death, earlier diagnosis of a terminal illness (if life expectancy is less than 12 months) or meeting the definition of one of the named critical illnesses within the term of the plan. The amount of cover increases each year to a maximum of 10%.

This contract offers reviewable premiums only.

Increasing plans will increase in line with the changes in the Retail Price Index (RPI) subject to a maximum of 10%. The premium increases in line with the change in the RPI multiplied by 1.5 subject to a maximum increase of 15% per annum. The RPI provides an indication of inflation on a monthly basis. The RPI measures and tracks the average change in the purchase price of goods and services such as housing expenses and mortgage interest payments. If the changes to the RPI are 1% or less, then the premium and amount of cover will stay the same until the next review.

Target market

Mortgage

Where there is an interest only mortgage and need a policy that pays out a lump sum in the event of death, terminal illness or critical illness.

Business

Where a lump sum is required to:

  • Cover the loss of a key person.
  • Purchase the shares owned by a director or partner.
  • Cover an interest only business loan.

Suitable if customers

  • Want to take advice on the suitability of the product
  • Want the option for the level of cover to increase over the term of the policy.
  • Need a lump sum in the event of death, terminal illness or critical illness and have dependants, and are not willing to self-insure or do not have funds elsewhere.
  • Have a business need to cover the loss of a key person, to provide finances to purchase shares of a director or partner in the event of their death or to cover an interest only business loan.
  • Have medical conditions that do not prevent provisions of cover and are happy to be underwritten.
  • Are UK resident and can afford monthly premiums for the chosen cover.
  • Customers who want their premiums to be reviewable.

Unsuitable if customers

  • Wish to purchase direct without advice
  • Want their policy to decrease (decreasing cover).
  • Want a product to pay a monthly benefit if they are unable to work for a period of time.
  • Want a product to pay a benefit if unable to work for a period of time due to accident or injury (IPB).
  • Do not have a business need to cover the loss of a key person, to provide finances to purchase shares of a director or partner in the event of their death or to cover an interest only business loan.
  • Have health conditions that may result in cover not being issued.
  • Do not need death, Terminal Illness and critical illness cover / without dependants, and are willing to self-insure and have sufficient funds elsewhere.
  • Require a non-underwritten journey.
  • Are not UK residents and cannot afford monthly premiums and annual increases in premium.
  • Want their premiums to be guaranteed.

Amount of Cover

  • No minimum sum assured. Driven by minimum premium.
  • Maximum sum assured:
    £3 million is Specific Work Tasks definition under TPD applies, or
    £2 million if Own Occupation definition under TPD applies.

Term

  • The minimum term allowed is 5 years (2 years if Life Insurance with Critical Illness Cover or Critical Illness Extra is chosen).
  • The maximum term allowed is 40 years.

Age restrictions

  • The minimum age to take out a policy is 18. It is possible for a life of another policy to be taken on a 17 year old by an adult with insurable interest. This policy can then be placed in an Absolute trust with the 17 year old as the beneficiary.
  • The minimum age at the end of the policy is 29.
  • The maximum age for buying a policy is 64 (or 67 if Life Insurance with Critical Illness Cover or Critical Illness Extra is chosen).
  • The policy must end by their 70th birthday.

Premiums

  • Reviewable.
  • Payable monthly or annually by Direct Debit.

Options available

Benefits automatically included

If the policy is mortgage related, then the following are also included

Other information

  • For joint life policies, benefit is paid on the first critical illness claim or death, whichever occurs first.