Royal London has addressed the rising age of the retiree market by extending the age range of Income Protection and KeyPerson Income Protection covers from 55-years to 70-years old as the average individual looks toward a later step back from working life.
Occupations that fall under the proposed changes include teacher, professional drivers, security guards, fitness instructors and nurses.
Prior to the adjustment, some professions were unable to secure income cover further than the age of 55. On the removal of the restriction all occupations will be covered to a maximum age of 70.
The products that have changed are the personal menu plan, income protection, business menu plan, income protection, and key person income protection.
According to the latest figures from the Government Actuary's Department, the state pension that is currently 65 for men and 64 for women, and the later will keep rising in increments every few months and equalise at 65 for men and women in 2018. The figure will keep on rising until everyone born after April 6, 1978, will face a retirement age of 68.
Provider view
Debbie Kennedy, group head of protection strategy at Royal London, said: “We have improved our income protection by offering cover up to age 70. As people are living and working for longer it made sense to increase the maximum age to 70 to make sure that our range of income protection covers meets the needs of today’s customer and that income protection is available to people for the whole of their working lives.
“Income protection is the one protection product that every working adult in the UK should consider but our State of the Protection Nation report revealed that just 4 per cent of adults have an income protection policy compared to 6 per cent with critical illness cover and 26 per cent with life insurance. There is more that the industry needs to do to get across the message that insurance is important and making our IP more accessible is a step in the right direction.”
Adviser view
Elizabeth Fleming-Duffy, protection adviser at Christchurch-based Cherry Finance, said that the strength of the new employment inclusions to the Royal London policies would depend on their strength as own occupation claims: “I think the key thing is that as long as Royal London is looking at this on an own occupation basis it’s a welcome addition to their offer. I guess they’re assessing the risk of something happening in the course of these jobs.
"Someone in a desk job, for instance is unlikely to be injured at work, but equally if they’re hurt in a car accident the likelihood is that they can still do their job if they can sit at a desk. If you have someone else who works in a more physical job like driving or a security guard, if they are hurt in the course of doing that sort of job and it means they really can’t continue, it would be interesting to see if this type of policy would pay on that basis.”
Charges
Not applicable.
Verdict
There’s no avoiding it, the average age of the retiree is set to rise. We’ve all been warned, and intermediaries are going to have to get used to the fact there will be an older working population and these individuals will need further income protection – no bad thing for revenue opportunities for advisers in this sector with a potential demographic being created.
The inclusion of more “physical” or potentially stressful occupations, including drivers and nurses, up to the 70-year old cut off point is, indeed, a welcome inclusion across the Royal London income protection portfolio, but like all offers its strength will rely on the claims made especially in the own occupation space and how far the protection to the individual of such policies will reach.
