Over the last year it seems that nearly every insurer has made substantial product updates. Today it is the turn of Zurich and unlike other insurers that have focused on one product – typically Critical Illness – they have produced a re-vamped proposition across all products. In this Insight we take a look at the new products Zurich have released and focus on some of the product features they have added to their plans.
The first point to note is that for both Critical Illness and Income Protection, Zurich are now competing with the likes of Aviva, Legal & General and VitalityLife by offering both comprehensive (The Select product) and cost effective (The Core product) offerings.
Up until now, Zurich did not really have an Income Protection product that could compete, however the new propositions seem extremely competitive.
Core and Select Income Protection Features
Short-term Income Protection offerings seem to be gaining more traction and Zurich have included a choice of a 2-year claim benefit option alongside the full-term offering. This provides a good option for those clients that might not be able to afford the full-term product.
The addition of a minimum benefit guarantee is also welcome which guarantees to pay at least £1,500 per month on incapacity as long as the client is working at least 16 hours per week. Like LV= Zurich have also increased this to £3,000 if the client is a doctor or surgeon.
Select Income Protection Features
The more comprehensive Select product also offers a number of additional features. These include:
- Trauma benefit – This will pay the lesser of six times the monthly benefit and £50,000 if the client suffers from one of seven life changing events including blindness, deafness, loss of hand or foot, loss of speech, paralysis of limb and the loss of ability to live independently due to mental failure or inability to complete three of six activities of daily living.
- Family Carer benefit – This will pay the lower of the monthly benefit and £1,500 per month if the client has to routinely care for their spouse, civil partner or children due to inability to perform three of six activities of daily living.
- Hospital stay benefit – If the client is hospitalised for six consecutive nights during the deferred period, Zurich will pay £100 per subsequent night spent in hospital for a maximum of 90 nights.
- Needlestick benefit – Zurich will pay the lesser of six times the monthly benefit and £50,000 if the client is accidentally infected with HIV, Hepatitis B or Hepatitis C.
- Funeral cover – If the client dies within the term of the plan, Zurich will pay the lower of six times the monthly benefit and £10,000 to their family.
Zurich have also made some much-needed changes to their life cover. The removal of their terminal illness exclusion is most welcome and they now align with most of the market in paying any terminal illness claim within the term of the contract, as long as the client is given 12 or less months to live.
For mortgage policies they now offer a wide range of interest rate options ranging from 2% to 18% and have increased their free cover limit to £250,000. Their Separation option has also been improved enabling clients to split their joint life policy in to two single life plans if the mortgage is transferred to one name, a life takes out a new mortgage on a new property, divorce, dissolution of a civil partnership or even moving to separate addresses.
Like Aviva and Legal & General, Zurich now offer dual Critical Illness propositions with a comprehensive and cost-effective offering. For the comprehensive Select product, Zurich have made some major enhancements to their definitions and now offer 51 conditions which pay the full sum assured and 48 additional conditions which pay 25% of the sum assured to £25,000. The Core product has scaled down the number of conditions covered to fit with more modest budgets and covers 40 conditions which pay the full sum assured and two additional conditions paying 25% to £25,000.
The result of this is a massive increase in the level of cover offered to customers taking out the Select product compared to their old wordings as can be seen below:
To produce this analysis, we have used age-banded incidence data along with the gender, age and term of the plan to weight each condition based on how likely someone is to suffer from it. Therefore, those conditions that a consumer is more likely to suffer from have a far greater impact on the overall score than conditions that are rarer. This example is based on male and female thirty-year olds taking out a joint life 25-year policy.
Choice is also offered on the children’s cover. The basic children’s cover offers access to all listed adult conditions under the Core product and will pay 50% of the sum assured up to £50,000 or 25% of the sum assured to £25,000 for the additional conditions. Cover is provided from birth to age 22 with a survival period of 10 days. If the enhanced Child CI is selected Zurich will also double the payment for cancer conditions or if overseas treatment is required.
The enhanced children’s cover offers an additional six child specific conditions including Cystic Fibrosis and Hydrocephalus which both have high prevalence in a child’s first year of life. Cerebral Palsy, Down’s Syndrome, Muscular Dystrophy and Spina Bifida are the other conditions, and these would each be diagnosed either during pregnancy or immediately after birth. The addition of Diabetes Type 1 also means that their children’s Critical Illness proposition is vastly improved as can be seen from our doctors’ analysis below.
To produce this analysis, we have used age banded incidence data along with the gender and age of each child to weight each condition based on how likely someone is to suffer from it (this also includes the adult conditions). Therefore, those conditions that a child is more likely to suffer from have a far greater impact on the overall score than conditions that are rarer. This example is based on male and female child both born today.
Like Old Mutual Wealth, Zurich have added the ability for children of the life assured(s) to take out their own policy free of underwriting, however they have taken this a step further. In the OMW policy a child must take out the policy within the 6 months preceding their 22nd birthday. Zurich have extended this and will allow a child to take out a policy any time between their 16th and 22nd birthday.
Overall the new products have breathed life into Zurich’s protection proposition which was starting to look tired when compared to the market. The Income Protection proposition offers extremely comprehensive cover for clients with some great added features within the Select proposition. It is also noticeable that Zurich will now compete with LV= as the go to provider for doctors and surgeons. The Critical Illness proposition offers choice to advisers with the ability to add on more extensive cover if required and is now competing at both the comprehensive and cost effective ends of the market.
Due to the sheer number of new features Zurich have included in their plans, we cannot cover everything within this Insight. If you would like to understand more about the product advisers can register at www.advisersoftware.com where you can compare the new plans to the rest of the market.