Protection specialist LV= outlines how it will deal with amendments to protection policies after the EU gender directive becomes law on 21 December 2012.
LV=’s protection policies will remain on gender specific rates for the vast majority of amendments including exercising a guaranteed insurability option or a change in the amount of cover. Clients with reviewable or inflation-linked cover will also remain on gender specific rates if their premium changes.
If a new type of cover is added to a policy, for example, adding life cover to a standalone critical illness plan, a new contract will be formed and LV= will offer a gender neutral premium. See below for a full list of how LV= will deal with amendments.
Mark Jones, LV= Head of Protection said: “We are adopting a fair and sensible approach to how we treat policy amendments once the gender directive is in force. We want to assure advisers that a policy won’t revert to neutral rates further down the line if a simple change needs to be made. This will help avoid the possibility of policies lapsing, or cover not keeping pace with people’s needs, by not increasing premiums for reasons an adviser will find difficult to justify to clients.”
In the lead up to G Day LV= is guaranteeing protection applications received on or before 9 December will be processed on gender specific rates. The company will underwrite applications based on the medical information provided by the client at application, and using normal underwriting standards will offer them a premium and terms.
LV= recently launched a website dedicated to helping protection advisers ahead of the gender directive and I minus E tax changes. www.LV.com/nomoreguesswork
Amendments to existing LV= protection policies that would remain on gender specific premiums
– Exercising a contractual guaranteed insurability option (GIO) or increasing benefit option*. For example increasing cover following a pay rise, birth of a child or moving house.
– Premiums that change as a result of regular inflation or premium reviews will continue on gender specific rates
– If a policy is reinstated within the grace period (following, for example, missed premiums), it can continue on gender specific rates. If it is reinstated more than six months after the first missed premium, we will set up a new policy and this will be on gender neutral terms.
– Increasing or decreasing the amount of cover
– Extending the term, changing cover to an older age or later end date
– Shortening the term, changing cover to a younger age or earlier end date
– Changing from inflation-linked cover to level cover
– Changing from level cover to inflation-linked cover
– Notifying a change in smoker status – usually from smoker to non-smoker
– Removing a waiver of premium option
– Changing from single life to joint life cover
– Removing one of the lives assured from a joint life policy
– Notifying a change of occupation – increasing or decreasing, where relevant, their occupation risk rate class
– Extending or shortening the benefit waiting (deferred) period
– ‘Buying back’ life cover following a critical illness claim
* except ‘joint life separation
Amendments to existing LV= protection policies that would result in a change to gender neutral premiums
– Adding life cover, critical illness, life & critical illness, income protection, waiver of premium or total permanent disability benefit to an existing policy
– Changing from standalone critical illness to combined critical illness and life cover
– Changing from reviewable to guaranteed premiums, or guaranteed to reviewable premiums
– Changing from budget to full income protection, or full to budget income protection
– Splitting a joint life policy into two separate plans (following, for example, a separation or divorce)
