LV= launches ‘revolutionary' mortgage & lifestyle protection product

Insurance and investment group LV= has launched its innovative Mortgage & Lifestyle Protection product, which is simple to apply for and can protect customer's mortgage payments and living expenses.

Mortgage & Lifestyle Protection is a flexible, tailored mortgage payment and living expenses protection product. It offers cover against accident, sickness and unemployment with level mortgage payment protection and the choice of level or index-linked living expenses protection all under one plan. Mortgage cover and living expenses cover can run to different terms because people's need for protection may not end when their mortgage does.

Chris McFarlane, Head of Protection at LV=, said: "Based on extensive research, we believe that people are looking for something that is flexible and simple to understand, that ensures they have all their financial commitments protected. The ‘Credit Crunch' is contributing to people's anxiety about the rising cost of living and how they would be able to cope financially if they were to fall ill, have an accident, or be made redundant. Our revolutionary Mortgage & Lifestyle Protection product is not only transparent, it can adjust to people's changing lives.

"Whilst many people may think they are buying long term cover when they take out Mortgage Payment Protection Insurance (MPPI), the reality is that most current MPPI policies only pay out for a limited period, 12 or 24 months, which means they could stop when a customer needs it most. People cannot rely on the state to help them make ends meet, with the current incapacity benefit paying just £63.75 per week - not a lot to cover your mortgage and living expenses. We believe we can offer consumers peace of mind with our innovative protection solution."

A male aged 30 next birthday opting for Level Mortgage Payment Protection cover of £500 per month payable for 25 years and Index Linked Living Expenses Protection cover of £300 per month payable for 35 years (to age 65) will pay £32.92 each month, with a waiting period of three months before payments are made, and accident, sickness and unemployment cover being chosen. This is based on Rate Class 1, a low-risk occupation. And the cost reduces to £22.14 if a six month waiting period is chosen.

The LV= Mortgage & Lifestyle Protection product offers the following features and benefits:

A choice of Accident, Sickness and Unemployment or just Accident and Sickness cover
High quality disability cover

Accident and sickness cover that pays out until the plan-holder is able to go back to work, until the plan ends or the plan-holder dies (whichever is sooner), and is not limited to 12 or 24 months like most traditional MPPI policies.

The plan-holder can claim as many times as necessary on their accident and sickness cover, including for the same condition. After a claim the plan keeps on protecting them for the full term.

The plan pays out if the plan-holder cannot do their own job (not if they cannot do ‘any job' or any ‘suited job' as may be the case in many other income protection policies). We believe that this is the most realistic and most easily understood definition of incapacity.

This cover is available to employed and self employed people.

Optional unemployment cover

The plan can include up to 36 months' unemployment cover over the lifetime of the plan, with a maximum of 12 months at a time for any one claim. (Other policies in the market will only pay a maximum of 12 months.)

This cover is available to employed and self employed people.

Guaranteed Premiums

Premiums are guaranteed for the term of the plan. There are no premium reviews or age banded increases, no matter how many claims the plan-holder makes. This obviously gives the plan-holder ongoing peace of mind knowing that their premiums will never increase. In contrast, traditional MPPI is a reviewable contract, where premiums may be increased in the future.

With Living Expenses Protection, the plan-holder can also choose to index-link the living expenses they are covered for and, very simply, this means that their premiums will be index-linked too. (In some other index-linked products, the premium increases more than the cover later in life, whereas the LV= premiums are guaranteed only ever to increase by the same rate as the cover. The index used is the Retail Price Index (RPI). We believe that this is a fairer and more transparent approach to any future premium and cover increases.)

This plan has no cash-in value at any time.

Waiver of Premium

Waiver of premium is automatically included, so the plan-holder doesn't have to worry about paying for cover when they can't work or are receiving unemployment benefit under the plan.

Cover that can be tailored to plan-holder needs

Already flexible at outset, Mortgage & Lifestyle Protection can also be changed as the plan-holder's life changes, for example to add and remove options, or to change terms (subject to underwriting at that time, unless for guaranteed increase option).

Everyone's life is likely to change, and a changing lifestyle needs flexible protection. 'Guaranteed increase options' allow people to increase their protection after certain life changing events, for example having children, marriage, etc., without having to provide medical evidence of good health.

At all other times, customers will be able to alter their cover, e.g. increase or decrease the benefit level, or extend/shorten the term of their mortgage or lifestyle cover, although they may need to provide medical evidence of good health.

The Mortgage Payment Protection and Living Expenses Protection elements are set up independently, which means they can run for separate terms. This means that Living Expenses Protection doesn't have to end when the mortgage ends, because people's need to protect their income obviously doesn't necessarily end when their mortgage does.

Living Expenses Protection can also be index-linked to keep up with the changing costs of living.

LV= also cater for career breaks or customers becoming homemakers or taking voluntary redundancy but still requiring cover.

Healthy Steps

A free, confidential online health assessment check is available, offering personal advice on lifestyle, health and fitness to anyone who takes out Mortgage & Lifestyle Protection.

Chris McFarlane added: "Industry figures show that the majority of homeowners may have no protection for their mortgage payments or that the cover may be inadequate, which is concerning in the current economic climate. Our claims experience shows that the average length of an income protection claim is over six years, which is why our new product has been designed to pay out until the policyholder goes back to work or until the policy ends. This product is an all-encompassing long term disability cover to fully protect mortgage payments."