Scottish Friendly launch new game changing guaranteed over 50s life insurance product
‘My Mutual Guaranteed Over 50s Plan’ has been rebuilt from the ground up
After 5 years policyholders will earn a proportionate death benefit even if they stop paying in
Policyholders may also benefit from an early end date
Scottish Friendly has launched a new, game changing over 50s life insurance plan that helps protect vulnerable customers who may stop paying in whilst also rewarding members with the potential of ending their payments before the age of 90, whilst securing their full cash benefit on death.
The new ‘My Mutual Guaranteed Over 50s Plan’ is the culmination of two years research and development within Galbraith House, the home of Scottish Friendly. Like existing Over 50s plans, the new product is designed to provide members with the security of a fixed cash benefit in the event of their death after two years, provided they make all of their payments.
However, as the underlying product, which remains a pure protection product, is built on a with profits platform it means that customers benefit from knowing that, after five years of payments, they will be entitled to a proportion of their selected cash benefit even if they stop paying in. Furthermore, the with profits element of the product platform means that if the mutual achieves investment growth on their with profits fund then this can be used to provide the customer with an early premium end date.
This means that they will be told to stop their payments and their selected cash benefit will be paid in full in the event of their death – see figure 1 for an illustrative example.
On taking out a policy with Scottish Friendly, new customers will have the option to select the monthly premium they can afford, which starts from £7 a month, and their desired ‘cash benefit’.
The Scottish Friendly plan is available to anyone aged 50 or over, regardless of their medical history, although it must be started before the age of 75.
A report from Mintel found the number of over 50s life insurance policies taken out during the height of the pandemic in 2020 fell 10% on the previous year, while the total value of new premiums dropped from a high of £67.1m to £61.6m
But the outbreak of Covid-19 has made 20% of over 50s think more about life insurance options and the report suggests there will be a return to growth.
Neil Lovatt, Commercial Director at Scottish Friendly, comments:
The over 50s life insurance market has been crying out for change for several years. We realised that we needed to come up with some radical thinking in order to improve the broken model which can expose vulnerable customers to the risk of non-payment.
We are very excited to be launching this game changer development. It’s game changing because it’s our view that this will change the rules of the game going forward for Over 50s products. In time, as the mills of the industry grind out new product designs, we’re expecting others in the industry to follow our lead, but imitation is the sincerest form of flattery.
Figure 1: Illustrative With-Profit fund growth rates and the age at which policyholders might qualify for an early premium end date
*Low, zero or negative is assumed to be any growth up to 1.5% a year, no growth, or a loss on the Fund. Medium growth is assumed to be 3.25% a year. High growth is assumed to be 6.25% a year.
The illustrative growth rate(s) are for information only. We cannot guarantee that the Payment Term of the Policy will be reduced as it depends on the amount that would be paid to your Policy from any growth in the Fund in the event of your death. The growth rate(s) shown represent investment growth of the Fund and are after the effects of the costs of running the Fund.
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