Some Good Things and Some Bad – Holloway Friendly’s revised One2Protect plan
In reading this article you will understand:
- The changes Holloway Friendly have made to their One2Protect plan
- How their Rental GIO works and how this compares to other providers
- How the changes affect those with fluctuating incomes
There have been far fewer changes to income protection products recently compared to critical illness. Changing definitions are leading to a welcome race for simplicity in critical illness plans. It can be argued income protection needs the same. Holloway Friendly have become the first insurer to make significant changes to their income protection offering this year with much focus on flexibility for customers.
In this article we look at their new One2Protect plan and highlight the good and the bad in what has changed. While there are some positives the new contract removes features that were highlighted by advisers during our Protection Forum last week as especially valuable. Also, while new plan provides flexibility, it comes with significant small print it will be important to understand and make clear to clients.
The new One2Protect plan replaces Holloway Friendly’s previous product of the same name. It is specifically aimed at those in low-risk occupations such as office workers, solicitors, accountants etc. and priced for the lower risk these types of occupations pose. Compared to the old iteration of the plan, the new One2Protect offers far more flexibility to clients to match the cover to their budget. In total there are six different options:
- Level premium with a full benefit term
- Level premium with a one-year benefit term
- Level premium with a two-year benefit term
- Age costed with a full-term benefit
- Age costed with a one-year benefit term
- Age costed with a two-year benefit term
Such a wide range of options is great news if you are working with a client on a tight budget, however, advisers should beware that the plan is offered on a reviewable basis where premiums are guaranteed for the first 5 years and then reviewed annually from then on so pose no long-term premium guarantees.
Holloway Friendly are also providing a lot of choice regarding deferred periods by offering 1, , 4 , 8 , 13 , 26 and 52-week options. Again, a word of caution here for those looking for shorter deferred periods as at present a COVID-19 exclusion as outlined below still applies to the 1 , 4 and 8-week options.
“Any disability, illness, incapacity or complications of COVID-19 or arising from symptoms of upper respiratory illness, coughs, colds, influenza with or without fever”
A new addition to the One2Protect offering is a rental specific guaranteed insurability option. This option will enable a client to increase their benefit with no further underwriting if their rent increases and their benefit can be increased by the lesser of £9,000 p.a. or 50% of the original benefit amount. This addition makes Holloway Friendly one of only five insurers that currently offer this and as their mortgage guaranteed insurability option enables an increase if a new mortgage is taken out, clients will be able to use this if they move from rental to mortgaged accommodation.
Another positive move from Holloway Friendly is a change to the waiver of premium. Under the plan waiver was provided, however if the client qualified for this, they were required to continue to pay the premiums, which would then be refunded. This has now been scrapped and where a claim is being paid no premiums will be collected. This removes the unnecessary complications of the old approach.
Perhaps the biggest change, however is what has not been included. The old version of the One2Protect plan included a “fix your income guarantee” where the financial underwriting was performed at application and the client was able to fix their benefit at a certain level regardless of their income at point of claim.
This along with similar offerings from The Exeter and Vitality were highlighted as excellent examples of ways that advisers can safeguard against falling incomes. In the new One2Protect however, this feature has been removed with a minimum benefit guarantee of £1,500 p.a. now the only safeguard offered.
As mentioned above during last week’s Protection Guru Forums advisers explored a range of changes they think would deliver greater certainty for Income Protection customers. Advisers were keen to tackle uncertainty at point of claim particularly where a client has fluctuating income. This change by the Holloway appears a step in the wrong direction. Our next Forum on 9th March will further explore “What do we need to do to make Income Protection even more relevant in 2021?” you can get tickets to join the discussion here.
Overall the range of benefit and premium options built into the One2Protect plan are very good and will certainly help advisers when dealing with clients on lower budgets. Whilst aiding in bringing costs down, the reviewable nature of the premiums add uncertainty over how much the client will be paying past the initial 5-year guarantee period. It is also shame that Holloway Friendly have not continued to offer the fix your income guarantee as this was an excellent feature that many advisers valued especially when dealing with customers with fluctuating income. Those with changing incomes are an area where income protection plans need to do more and whilst this feature only addressed those whose income decreases, it did provide an element of certainty that most other insurers do not offer. Based on our experience, in this area at least the Holloway seem to have misjudged current adviser preferences.
Things to reflect on for CPD:
- Which of your clients would /wouldn’t this plan not be suitable for given its lack of provision for clients with fluctuating income?
- Does this open up IP opportunities to recontact your renting clients? Are there other or better provider options?
- How would the Covid exclusion on short term claims affect your recommendation of this plan?