It’s nice to see an insurance company launch a customer friendly product for a change. I’m  referring to Fortis’s Real Life protection plan, launched in conjunction with the broker, Life Search.

In  brief, Real Life incorporates seven protections - including term assurance, critical illness and income protection - all within one plan, obviating the need for the broker to sell three separate policies.

The plan works by having two pots - one for term assurance claims and one for critical illness and income  protection claims. Although not ideal, the plan has the advantage of providing broad, albeit limited, protection against death and loss of income.

Most people have some form of life cover, via with profit endowments, term assurance, whole of life policies or through workplace benefits. Far fewer people have protection against being unable to work because of long term illness.

While life cover only benefits your dependants if you die, critical illness and income protection pay the bills if you survive.

Critical illness pays you a lump sum if you survive 30 days from diagnosis of a serious illness, such as heart attack, stroke or cancer, while income protection pays you a monthly income if you are unable to work because of long term sickness.

In the case of Real Life, it works like this. Say, you buy £250,000 of life cover, there are two pots to draw on - a  £250,000 pot for term assurance, and a £250,000 pot for critical illness and income protection.

If you are diagnosed with critical illness, you can claim 12 per cent of amount in your pot, which in this case would be £30,000. You can make up to three critical illness claims, providing they are for different illnesses and there is still money in the pot.

If you make an income protection claim, it will pay out 1 per cent of the pot each month, or £2,500 in this example, until the pot runs out after eight years and four months (£2,500×100 months).

Although the income protection cover is clearly limited, the policy is a step in the right direction in that it will help close the protection gap that currently exists and the premiums are fixed for life.

As an example, a 25 year old woman office worker in normal health would pay £18.02 a month for  £100,000 of life cover up to age 60. Unless she increases the level of cover, the premium is guaranteed not to rise.

The plan is currently only sold via Life Search and Asda, but there are plans to roll it out to other brokers soon.

Matt Morris of Life Search says: “The whole point of Real Life cover is the protection it provides against all the eventualities of life. Nowadays, you are far more likely to suffer a serious illness or long term incapacity before age 65, than to die.”

For more information visit:

www.reallifecover.co.uk
www.lifesearch.co.uk
http://www.asdafinance.com/life-insurance-real-life-cover.html