Overview of Prudential's Life Insurance Cover Under the PruProtect Plan

This article will primarily concentrate on the PruProtect line of protection products by Prudential Life and mainly its life insurance offerings. PruProtect offers comprehensive protection. A potential client can choose one or more of the following core benefits:

Prudential Life also offers the Vitality Program. This is a rewards and discounts program that encourages Persons Insured to get involved in health and fitness activities for points that can be used to enjoy discounts to premiums and partner rewards.

PruProtect works by providing Persons Insured with a plan account. This plan determines the coverage amount to be paid for the core benefits:

The client can then add extra benefits to these core products. This allows the client with the flexibility to customize the cover that he needs and wants. These other covers are not linked with the plan account and are rather determined individually.

For the purposes of this article, the focus will be on the Life Cover aspect.

Quick Facts

  PruProtect Plan – Life Cover
Primary purpose of product

Provides flexibility for a client to choose and add benefits he needs, depending on the need of the client (i.e. to cover a mortgage, to prepare for inheritance tax, etc.).

Plan basics

Cover may remain level, decreasing, or indexed. Aside from life cover, the Person Insured can add serious illness cover or income protection cover.

Cover limits

£10,000,000

Eligibility
Minimum age at entry

16

Maximum age at entry

74

Other eligibility requirements

Must be a resident of the UK, excluding the Channel Islands and the Isle of Mann

Length of cover

Each cover has a defined term.

Minimum term

Depends on the preferred length of term

Whole of Life: Not Applicable

Maximum term

Term Assurance: 60 years

Whole of Life: Not Applicable

Maximum age

Term: 80 years old

Whole of Life: No Limit

Premiums

Premiums can either be paid monthly or annually

Future changes in premiums?

Premiums can either be guaranteed, reviewable or indexed.

For the Accelerator Option: Premiums start low, but will increase by 3% on either:

  • Every year for the first 10 years and then remain level
  • Every year until the cover expires
Minimum premium

£10 monthly

Maximum premium

None, dependent on maximum cover

Guaranteed premiums

Yes

Reviewable premium

Yes

Additional benefits

Terminal Illness

Optional:

  • Serious Illness Cover/Critical Illness Cover
  • Immediate cover
  • Disability cover
  • Income Protection Cover
  • Mortgage Free Cover
  • Family Income Cover
  • Waiver of Premium on Death
  • Education cover
  • Waiver of Premium on Incapacity
  • Guaranteed Insurability options
  • Minimum Protected Account
  • Protected Life Cover
Terminal illness

Yes

Joint life cover

Yes, Can be available as Joint Life First Death and Joint Life Second Death

Plan Details

Lives Covered

The PruProtect plan can either be a single or joint life coverage. For joint life coverage, it can either be:

Payment

The policy will pay out the death claim when:

For joint life cover, it can either be:

Premiums

The Vitality Program

This program of Prudential Life may affect plan premiums. With this program, the Person Insured can earn points for doing a specific activity aimed towards improving his health. Depending on points earned, discounts can be applied on the premiums.

Guaranteed Premiums

These are premiums that remain the same, except for the choices that the Person Insured makes with regards to plan amounts and additional benefits. This is not available for whole of life plan accounts with serious illness cover. For other covers, the option to guarantee their premiums should be made separately.

Reviewable Premiums

These are premiums that are periodically reviewed and may likely increase even without changes to the benefits.

Premiums are reviewed separately for each Person Insured in the policy.

Additional Benefits/Options

Immediate Cover

This provides life insurance coverage while the Person Insured’s application is being processed. This limited life cover is free of charge and is applicable to a single life plan or a joint life first death plan.

Maximum amount of Immediate Cover: £500,000 (combined for life, family income and education life cover)

Other conditions:

Serious Illness Cover

Also called Critical Illness cover.  The lump sum to be paid upon diagnosis of the illness or condition will be a percentage based on the severity of the illness. The percentages paid are 100% (most severe), 75%, 50%, 25%, 15% and 10%. The date of expiry of the critical illness cover coincides with the expiry of the life cover.

Serious Illness Cover also includes any children (3 months to 18 years old) that the Person Insured has. Serious Illness also includes permanent disability.

Maximum amount of Cover:       

Other conditions:

Disability Cover

This pays a lump sum in the event that a Person Insured becomes disabled due to accident or illness.  The payment will be based on the severity of the disability. Disability Cover is only up to 69 years old. For Whole Life Plans, this cover can be converted to a limited form of Serious Illness Cover.

Claims under disability cover will be payable if:

The amounts of payments will be based on the following categories:

Category Description % of Disability Cover

Category A

- Person Insured meets policy definition of Category A

- He survives for at least 14 days from the start of diagnosis

- The claim is made within 6 months from the date of diagnosis

100%

Category B

- Person Insured meets policy definition of Category B and has level 2 or level 3 Disability Cover

- He survives for at least 14 days from the start of diagnosis

- The claim is made within 6 months from the date of diagnosis

50%

Category C

- Person Insured has level 3 Disability Cover

- The condition prevents the Person Insured from earning 70% of the income from his own occupation for four consecutive months

- The claim is made 3 months from the date of diagnosis and 4 months before the Disability Cover expires

- Up to six benefit payments will be made for the same disability

2.5%

Category D

- Any illness or injury that results in the Person Insured’s inability to do his own occupation for profit or reward

- The Person Insured survives until the time the company approves the claim/disability

- The claim is made within six months of the diagnosis

100%

Maximum amount of Cover:

Income Protection Cover

This pays a regular income in the event that the Person Insured becomes incapacitated, as defined in the policy.

The definition for being incapacitated may be:

The payments will start once the deferred period is done. The deferred period is a “waiting period” in which there is continuous disability. The deferred period is selected by the Person Insured at the time of application. Once a Person Insured is incapacitated, it is important that he files notice within the deferred period. The policy specifies the notification period for the selected deferred period.

Amount of Payments

The Income Protection Cover can either remain level or increase according to the Retail Prices Index.  If the Person Insured opts for Indexed Income Protection Cover, this will increase annually by 2.5% or the actual percentage rise in the Retail Prices Index, with 0% as the minimum and 10% as the maximum.

Income Evaluation

Part of evaluating the claim is to verify the earnings. This will be the basis of the amount of Income Protection benefits paid out. The verification of the earnings is made at the request of the claimant/Person Insured. If no such request is made, the payments will be based on pre-incapacity earnings.

The verification requirements will be different for different kinds of employment:

The payments will either be based on a set maximum or on a percentage of the verified earnings or pre-incapacity earnings.

Other Benefits/Add-Ons Related to Income Protection Cover

Escalation of Claims in Payment

While the benefit payments are being made, there will be no increases in the payments, except when the Person Insured opts for the Escalation of Claims in Payment. These increases are made annually on the anniversary of the first Income Protection payment date.

Permanent Disability Increase

The monthly benefit payments will be increased if the Person Insured becomes permanently disabled. This is for those that have Comprehensive Income Protection Cover.  The increase will be 10% of the monthly benefit, for as long as the annual maximum benefit does not exceed £200,000.

Recovery Benefit

This provides the Person Insured with benefits to help him during his recover. This is not a direct monetary payment to the person insured; rather, these are services such as:

The amount is up to £1,000 (for Primary Cover) or £2,000 (for Comprehensive Cover).

Back to Work Benefit

If the Person Insured is able to get back to full-time work and he has a deferred period of 3, 6 or 12 months, Prudential Life will pay a back to work benefit after all payments under the Income Protection Cover are paid, including the above benefits. The benefit will be based on a specified percentage of the last full monthly benefit payment.

In a Reduced Capacity Benefit

If the Person Insured is able to get back to work but in a reduced capacity with a lower monthly income, the Person Insured will receive a fraction of the full benefit amount, based on the Person Insured’s new income.

Waiver of Income Protection Cover Premiums

While the benefit payments for Income Protection Cover are ongoing, premiums for the benefit will be waived. The waiver of premiums will stop if the benefit payments are also stopped. One other reason for the waiver to stop would be if the Person Insured performs any kind of work for reward or profit, unless the Person Insured is receiving the rehabilitation benefit.

Other Details:

Overpayment

When there is overpayment, this will be offset using future benefit payments or by asking the Person Insured to return the excess payments.

Length of Payments

Benefit payments start after the Deferred Period. It will end when:

For those who are living abroad at the time of the benefit payments, the benefit payments are made only up to a maximum of 26 weeks’ worth of benefit within a year.

Subsequent Claims

When a Person Insured has returned to work, the benefit payments will stop.  If the Person Insured needs to make another claim for the same condition, the deferred period will be waived when the second claim is made within six months after the benefit payments for the 1st claim has ended.

Mortgage Free Cover

This is temporary and free Life Cover which provides life insurance protection while the application is being processed. This is for Mortgage Life Insurance plans, where:

This provides life insurance cover for:

This is made available to Mortgage Life Insurance applicants who:

The mortgage free cover starts either when there is an exchange of contracts or when Prudential Life issues an acceptance letter. It will end when the actual life insurance cover of the plan starts, three months after Prudential has issued an acceptance letter

Waiver of Premium on Death

This is only for joint life plans. This will waive the premiums on the death of one Person Insured or upon diagnosis of terminal illness. The waiver will cover the premiums for the other person that is covered by the plan.

The Waiver will also include premium increases when these are increases for

The waiver will also stop when the plan is cancelled and when the remaining Person Insured dies.

This benefit is not payable if:

Education Cover

This provides education benefits to a Person Insured’s child when he dies or is diagnosed with a Terminal Illness. These are benefits related to the child’s education and can be for one or more of the Person Insured’s children. The benefit will also pay out if the Person Insured includes Serious Illness as part of the reasons for payment.

Education cover can cover various types of schooling: State school or private school, with or without boarding. The education cover may pay for:

Waiver of Premium on Incapacity

If the Person Insured becomes incapacitated/disabled, premiums for the whole plan will be waived. This is if the Person Insured meets the definition of incapacity/disablement.

As with Family Income Cover, the definition for being incapacitated may be:

The premiums will be waived at the end of the cover’s deferred period and will stop when:

Guaranteed Insurability Options

This allows the Person Insured to increase his cover for certain life events, without the need to provide additional medical information. This is for plans that are issued at normal rates and without special plan exclusions.

For the life cover, the events that can merit an increase are:

When applying, the life event should have occurred within the last three months and you present evidence of this. The Guaranteed Insurability option will not be available for:

Limits

The maximum increase applicable for the life cover is £150,000. This is further capped when it comes to specific life events:

The Person Insured can also exercise this option a maximum of three times.

Minimum Protected Account

With the PruProtect Plans, a claim from the other benefits (i.e. Serious Illness) will result in the decrease in one’s plan amount. The Minimum Protected Account option tops up the plan account up to a minimum level. This is only applicable if, aside from the life cover, the plan also has at least one of Serious Illness Cover or Optional Serious Illness Cover for children.

Protected Life Cover

If the PruProtect Plan has both Life Cover and Serious Illness cover, having the Protected Life Cover ensures that the Life Cover will not be reduced, even after a claim under Serious Illness Cover or Optional Serious Illness cover for children has been made.

Exclusions

The cover will not pay for:

How to Make a Claim

There are time limits to make a claim, it is very important that once there is cause for a claim that the Person Insured files a claim as soon as possible.

When making a claim, Prudential Life will usually require the following:

To secure your family's future, fill in the form on the right and get your term life insurance quote now.

Types of insurance:
Term life insurance 101:
Life insurers:
*Scottish Provident 2012 life cover claims paid report.
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