Royal London has made a series of improvements to strengthen and expand the flexibility of its income protection product.
The mutual insurer announced a series of updates to ensure its income protection products provide better outcomes for clients.
One update was the introduction of a “leading” minimum income guarantee, rising to £21,000 from £18,000 and to £42,000 from £36,000 for doctors and surgeons.
The importance of this was underlined by the insurer, who said: “One of the key elements that customers look for in the product is certainty that their income will be replaced.”
Radcliffe & Co Independent Financial Advisers protection specialist, Charlotte Rogers, said: “It’s encouraging to see that Royal London has listened to market feedback, addressing key issues and introducing changes that will make a real difference.
“A minimum benefit guarantee of £1,500 per month (or £3,000 for doctors and surgeons) has been the limit for many years with most insurers, and the increase is definitely more reflective of the typical amount needed to maintain essential expenditure.
“Similarly, a much higher percentage of an average person’s income is required now in order to cover essentials, so increasing the sum assured limits will enable more families to stay financially resilient, with spending more likely to be covered in full.”
The insurer also announced a “significant” reduction in evidence required to prove fixed costs for self-employed.
Instead of asking to see evidence, such as lease agreements, office rental payments or phone contracts, over a three year period, the insurer will now require just 12 months of costs.
Royal London described this as “great news for those relatively new to self-employment” who previously would not have had sufficient evidence.
Additionally, against a backdrop of higher costs that households have faced in recent years, the insurer has increased its replacement ratios so claimants can receive a pay out with a higher percentage of their salary.
The changes mean policies now pay 65 per cent of the first £60,000 of the customer’s salary plus 50 per cent of the remaining amount up to £250,000 as a monthly benefit when the policyholder is too ill to work.
Royal London protection specialist, Jennifer Gilchrist, said: “The pandemic followed swiftly by the cost-of-living crisis has impacted almost everyone’s everyday finances.
“It has focused people’s minds on the need for longer-term financial resilience and protecting themselves and their loved ones should hard times hit.
“In doing so it’s been a catalyst for people seeing the importance of protecting their income and, as a result, income protection sales have seen double digit growth.”
Gilchrist said that this could be income protections “coming of age moment”.
tom.dunstan@ft.com
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