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What cover is offered in advance of a plan being put in force… everything you need to know

What cover is offered in advance of a plan being put in force… everything you need to know

Over the last six months there has been a lot of focus about the length of time it can take to get cover in place, especially when medical underwriting is required. The reasons behind this are numerous and the COVID-19 pandemic has intensified the debate and desire to improve this. Long waiting times between an application and terms being offered will leave the client financially exposed so new innovative solutions need to be found.

In such scenarios many insurers offer free cover in advance of a plan being put in force. For many clients this may be sufficient, however for others and particularly where medical evidence takes a long time or there is a particularly high sum assured it may only be a partial solution. In this article we look at what cover is offered across different benefit types.

Life Cover

The two major reasons for taking out life cover are to provide the family of the life assured with financial security or to repay a liability such as a mortgage. Where the reason for the plan is to provide financial security to the family it is clearly important that the client is covered as soon as possible. Where the plan is to repay a liability, it is important that the clients is covered from the date the liability starts. For mortgages this is when contracts are exchanged which will usually be before the mortgage starts and therefore the date the plan should commence.

In this article we explore the different types of free cover offered on personal life protection plans including the difference between free cover during underwriting and free cover during property purchase. We consider which insurers offer what, how much cover they provide, for how long and with what exclusions.

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Critical Illness

Like with life cover there are two types of free cover that could be offered on the critical illness element of a plan relating to cover during underwriting and cover during property purchase. As a client is more likely to claim on a critical illness policy than they are on life cover, there are however often more restrictions on the “free cover” provided, with some insurers not providing free cover for critical illness at all.

In this article we look at who offers free cover for critical illness, what restrictions are put in place and the amount that a client could be covered for.

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Business Protection

The death of any key person of shareholder can have a devastating effect on the ability of any business to continue to function properly and profitably. Small and medium enterprises especially are typically more reliant on a small number of key individuals at the top than larger business and tend to be hit harder if the right protection is not in place should things go awry. Once the need to protect against such circumstances is established, it is important to get cover in place as soon as possible to mitigate the risks.

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Watch out for future “Everything you need to know” pieces where each week we will cover a different topic and provide you with the information you need to know to discuss the topics with your clients.

About The Author

Adam Higgs

Adam leads Protection Guru's detailed protection research and benchmarking of both product and operation features provided by insurers and has a vast knowledge of the protection market. He has been instrumental in building the protection comparison service Quality Analyser and maintaining the data to enable adviser to quickly and easily compare protection products based on qualitative measures. He also works with adviser firms to help in panel reviews and with insurers to help them understand the shape of the market, their strengths and the areas that could be improved in their products. In his spare time and when not spending time with his wife and two children, Adam is a keen Arsenal fan and enjoys hacking his way around a golf course.

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