Zurich Income Protection: Giving your customers more

What changes have you made to your income protection proposition and why?

One of the main changes we’ve made is to use a gross income replacement ratio to calculate the maximum monthly benefit as opposed to the net income replacement ratio we used before. We will now cover up to 65% of the first £60,000 of the customer’s gross income plus up to 45% of their gross income above £60,000, subject to a maximum of £20,000 per month. This allows us to still provide high levels of cover to lower earners but also enables us to provide a more attractive level of cover to mid and higher earners.

We can now consider dividends as part of the calculation too, increasing the appeal of our income protection to those customers who are company directors. We recognise that business owners strive to draw income from their companies as tax-efficiently as possible, often making good use of both their income tax allowances and their spouse’s income tax allowances. So, for customers who are company directors, we will consider any dividends they receive themselves, as well as any dividends paid to a spouse, civil partner or cohabiting partner that would cease to be paid if the life assured was to become unable to work due to illness or injury.

Does the level of monthly benefit come with any guarantees?

We recognise that life changes. When a policy is taken out the maximum monthly benefit is based on the income being earned at that time. But a customer could make a claim many years down the line and a lot could have changed for them in the intervening period. Their income could have fluctuated or gone down. By offering both a Maximum Benefit Guarantee and Minimum Benefit Guarantee, our cover aims to safeguard customers against fluctuating incomes.

The Maximum Benefit Guarantee is designed for customers who may experience small to moderate fluctuations in their income or where annual salary increases might not keep up with the increasing rate chosen on their policy. Customers who want Increasing Cover can opt for it to rise by a fixed 3% or 5% or in line with inflation as measured by the Retail Prices Index. Over time, the monthly benefit could have risen more rapidly than their earnings. With our Maximum Benefit Guarantee, if the difference between the monthly benefit that a customer is insured for and the income they can evidence at the point of claim is 10% or less, we’ll pay the full monthly benefit.

The Minimum Benefit Guarantee supports customers who may experience larger fluctuations in their income or where annual salary increases might not keep up with the increasing rate chosen on their policy. Whereby a customer doesn’t qualify for Maximum Benefit Guarantee, we’ll still guarantee to pay at least £1,500 per month or the monthly benefit if lower. This £1,500 limit rises to £3,000 for doctors and surgeons, and dentists are now also eligible for the higher limit.

The Minimum Benefit Guarantee is a well-known feature in the market but we feel the Maximum Benefit Guarantee, which was also included under our previous product, deserves greater awareness among advisers and customers. This is especially true nowadays. The cost-of-living crisis and period of stubbornly high inflation that we have experienced means that many customers with Increasing Cover could unwittingly be overinsured. Our guarantees help to safeguard them against paying for a level of cover that they would otherwise not be able to benefit from.

What other changes and existing features are particularly attractive to advisers and their customers?

Advisers want policies that can be tailored to meet the evolving needs of their customers. At Zurich, we achieve this through a range of optional extras for our customers, which we have taken steps to improve further.

Income Protection Enhanced offers all the benefits of standard cover and more.

Trauma cover provides a fixed lump sum of £25,000 to help cover expenses, such as home adaptations, if a traumatic incident leaves your customer with a life-changing condition. We have changed this from the lower of six times the monthly benefit or £50,000 for simplicity and to ensure all customers receive a meaningful amount. We have also amended the conditions covered to better reflect the objective. For example, we have introduced cover for brain injury. The other conditions covered are blindness, deafness, loss of hand or foot, loss of speech, paralysis of limb, and total and permanent loss of ability to live independently.

Hospital stay benefit provides £150 per night to help with incidental expenses incurred by your customer or their family as a result of them being in hospital. We have increased this from £100 per night to provide extra help with things like travel, parking and food. We’ve lifted the restriction to only pay this benefit during a customer’s deferred period to better support those who need longer-term hospital treatment. The benefit is payable from the seventh consecutive night’s stay in hospital for a maximum of 90 nights.

Funeral benefit provides a fixed lump sum of £10,000 to help your customer’s family meet funeral costs in the event of their death. We have changed this from the lower of six times the monthly benefit or £10,000 for simplicity and to ensure all customers receive a meaningful amount.

Other optional benefits

Zurich Accelerate gives customers and their children fast access to consultations and diagnostics for cancer, heart and neurological conditions. Customers who have Accelerate as part of their policy can receive treatment abroad at some of the leading hospitals in the world, as well as access the latest precision cancer medicine and cancer clinical trials.

Multi-fracture cover provides customers with a financial cushion of £2,000, £4,000 or £6,000 (depending on the injury) in the event of a broken bone, dislocation, rupture or tear. We apply some exclusions such as for people who are paid or compensated for participating in sports and people who take part in certain other sports or pursuits.

Income Protection Enhanced and Multi-Fracture Cover must be added when the policy starts but Zurich Accelerate can be added at any stage. All three optional extras can be removed at any point.

What is your elevator pitch for Zurich income protection?

The changes we’ve made to Zurich Income Protection coupled with the range of attractive options and features that we already offered, such as the valuable guarantees that protect policyholders against fluctuating incomes, make Zurich Income Protection a very compelling proposition for advisers and their customers. We believe that our cover offers the right range of benefits while being simple to understand and explain to customers. Our product refresh allows us to provide more cover for mid and higher earners. We offer advisers and their customers clarity and certainty when buying income protection. And we continue to allow them to adapt their policy to meet their future needs.

In summary, Zurich Income Protection offers more than ever: more cover, more simplicity, more security at the point of claim for customers and more compliance with the Consumer Duty for advisers. We believe our proposition puts Zurich firmly on the radar of advisers looking to secure competitive income protection for their customers.