LV= gives free critical illness cover to new Income Protection customers

Protection specialist LV= is offering free critical illness (CI) cover to anyone taking out an income protection (IP) policy under the LV= Flexible Protection Plan within the next three months. New customers will receive a free lump sum CI benefit equivalent to three times their monthly IP benefit.

Chris McFarlane, LV= Head of Protection, said: "At LV= we believe that protecting your regular income should be at the heart of sound financial planning. Worryingly, there is a clear consumer misconception that critical illness cover will provide the protection they need if they are unable to work due to long term sickness or an accident. In many cases the real need is for a regular continuing income, rather than a lump sum payment provided by critical illness cover.

"In addition, there are conditions that are not covered under critical illness policies, for example a back injury, that could leave people experiencing financial difficulty if they are unable to work and don't have the right cover in place. Now more than ever, financial advisers need to help their clients understand the importance of protecting their regular income in case they are unable to work for a long period.

"This special offer aims to promote income protection and encourage more customers to protect their regular monthly income, but it also recognises that customers can additionally benefit from a small lump sum payment to help them adjust if they had a serious illness , for example to convert a car or bathroom. LV= believes that this will make it easier for financial advisers to sell more appropriate cover and therefore grow their volumes."

Details of the LV= free Critical Illness cover promotion are as follows:

On diagnosis of a critical illness that meets our policy definition, and survival for at least 14 days, LV= will pay the customer a lump sum of three times their monthly IP benefit. We only cover the critical illnesses we define in our policy, and no others.

The free CI cover is as defined under the existing Flexible Protection Plan CI cover option (except for Total Permanent Disability). Free Children's CI cover is included.

The free CI cover applies for as long as the IP cover is in force.

The offer is available to anyone applying for a new Flexible Protection Plan between 2 February and 30 April 2009.

Income Protection Toolkit

LV= has also launched an online Income Protection Toolkit, available from lvadviser.co.uk , for financial advisers to use with their clients. This follows the publication of LV= research which revealed that of those surveyed eight out of ten adults in full time employment (84%)1 were unaware of recent changes to the Welfare Reform Act, and how these could affect any income received from the state if illness or an accident prevented them from working.

Income Protection Shortfall Calculator

Among various multi-media elements, the toolkit includes an Income Protection Shortfall Calculator for financial advisers to use with clients, to show the impact that an accident or sickness could have on their monthly income. The calculator also takes into account what people may be entitled to receive from their employer if they couldn't work for a long period, and the Employment and Support Allowance (ESA) they may be able to claim.

The adviser simply inputs their client's age, annual income and the number of months of full pay they may be entitled to from their employer. The calculator then shows:

The potential ESA the client could receive and for how long.
The monthly income shortfall if they have no IP cover.
The potential monthly income if they did have IP cover.
The maximum monthly IP cover they can apply for, based on their annual salary.
A graph showing the client's predicted monthly income over time with and without IP cover in place.
Advisers can also print off an individual report for their client.

Chris McFarlane continues: "We are committed to supporting advisers with relevant tools, information, offers and guidance to help educate their clients. The free CI offer highlights the importance of IP, both on its own and alongside CI, and will also help advisers to grow their business. Our innovative calculator is easy to use and shows in a simple graph format how IP can protect a client's regular monthly income, should the worst happen."