Zurich’s Level Protection Plan: Characteristic features

Zurich’s Level Protection Plan has a cover that includes life insurance and critical illness plan that protects the policy holder’s family, business and supports to pay off an interest only mortgage or loan. The cover lasts for a pre decided number of years and will pay off lump sum if you die or go through a terminal illness, which may result in death within a year or suffer from critical illness during the term.

Other options which can be included on demand are:

• Convert a part or whole of your life cover into a lifetime protection plan

• Renew the plan on term end

• Support payment protection if by any chance you cannot continue to work due to illness or long time injury.

The aim of the Life Protection Plan is to cover all expenses of your family and business in the event of your death.

What you need to do? – Commitment by the policy holder

Be committed to making regular payments for premiums

Give all information to the insurer without hiding any facts. There will be no cross checking with the doctors or medical authorities.

Also give all information for changes that have happened just before starting the policy. Otherwise, the policy may get invalidated in the future.

You need to consider any other benefits received from the state like plans for senior citizens and other insurance policies that cover you for accidents, injury or illness. This should also include plans taken with Zurich.

Kind of covers provided by the plans:

Life cover – It will make payoff in the event of death of the policyholder during the term period or if you are diagnosed with terminal illness. Payoff in case of terminal illness will be possible only if the ailment has no known cure or has reached a state which cannot be cured. Also, when the medical consultant gives an opinion that the patient would die within next 12 months or during the term period. The plan would be considered as ended once the payment is made by the company.

Life or earlier critical illness cover– The Company will pay full critical illness cover sum in case of a successful claim. A critical illness cover would be offered only for the list of medical conditions and operations covered by the plan. For this, go through the plan thoroughly. You can also discuss with your insurer regarding this.

Some of the conditions may get you a cash payoff of 20% of the critical illness cover or £15,000, whichever is lower.

The company offers critical illness plan only for the illnesses mentioned in their plan and only if they fall as per the definition in the plan.

How do guaranteed payment works?

Guaranteed payment means the premium amount, be it for monthly or yearly basis will not change until you change the amount of cover on your plan.

Can I include any extra optional benefits?

You may get optional benefits depending on your age, occupation and plan. The most common of these benefits are:

• Total permanent disability

• Payment protection benefit

• Waiver of payment benefit

• Convertible term

• Renewable term

• Indexation

This may vary. It is advisable that you consult the insurer in person for all details.

Eligibility for the plans:

• You must be a resident of the United Kingdom.

• The plan can cover one person or two people within a joint policy.

• For life cover plans, you must be aged between 16 and 83 years.

• For life or earlier critical illness cover, your age should be between 16 and 69.

• If the plan covers two people that is, if it is a joint policy then the age restriction is valid for both the policyholders.

How long would the plan last?

The term for level protection plan with a life cover would be minimum one year and maximum 50 years. It should end before the policyholder reaches 85 years of age.

For critical illness cover, the plan should last for minimum 5 years and maximum 40 years. It should end before the policyholder reaches 75 years of age.

Payment protection plan can last up to 49 years and should end before you reach 65 years of age.

Choose a plan with renewable or convertible term option. It is always better and helps the plan to protect you for long.

Risk factors that need consideration:

Be honest on the application form. Answer all questions accurately. In case, any of the information found incorrect at any stage, you will lose out on the payoff of policy.

In the case of non-payment of the premium for 30 days, the cover will be invalidated and the amount already paid would not be refunded.

Pay off would not be made if the company is not informed about changes made in some areas at the time of application and start of the policy. These areas are:

• Personal health

• Medical history of the family

• Job related changes

• Stay related changes i.e. whether you choose to live out of U.K.

• Frequency and time period of your travel abroad

• If you have any life-threatening hobbies

• Drink and smoke habits

• Use of recreational drugs or non-prescription drugs

What would be the cost of the plan?

This is an important question which you need to ask your advisor.

• The main factors affecting the plan cost are age, health, occupation, smoking and drinking status and hobbies.

• Other factors are the type of cover and the amount you insured for. If you choose any additional benefits then you have to pay a little higher for it.

• The time and length of the cover will also reflect on the premium cost.

You can pay monthly through Direct Debit or choose to an annual premium paid by cheque or direct debit, whatever suits you.

Is there any provision of a free cover in the plan?

The free cover could be given for a limited period of time when you buy a property. It would be for the period between the date you exchange contract and the date you finish the contract of buying the property.

For plans that are bought to protect a business loan, the free cover is given during the time of assessing the application.

Again when the Level Protection Plan is bought to guard the life of an employee, a free cover can be given during the time of assessing the application.

Is there any possibility to change the plan after it starts?

Yes there are two possibilities – Increase your cover and Separation option

The rule that allows the policyholder to increase their cover after the plan has started is termed as guaranteed insurability option. This increase would be limited to a certain extent and does not demand any additional information about health and activities of the policyholder.

You can increase the cover of your plan in cases when you:

• Increase your mortgage or loan

• Marry or get divorce

• Start or dissolve a civil partnership

• Become a parent naturally

• Go for legal adoption of a child

• Get promotion and salary increase of 10%

• Either increase or change your business assurance needs

• Increase an existing loan or take a new one

Separation option is possible in case of joint plans where two people use a single plan to protect a mortgage. If both decide to separate then the policy allows both to continue the same cover through separate plans. No more details would be asked regarding health or activities.

Is there are any chance that my payments change in the future?

In Zurich’s Level Protection Plan, the payment will remain the same as it works on guaranteed payments basis. The payments would remain same for the entire term of the plan. They change only if you:

• Change the level of the cover

• Include indexation benefit

• Convert the life cover into Zurich’s whole of life plan on guaranteed payments

• Renew the plan for a further term

What if I stop paying premiums?

In that case, the cover will end 30 days after the due date of last payment. Also, none of your previous payments would be refunded.

What would be the pay out of the plan?

It would depend on the cover you choose. Depending on the type of cover, the company may pay:

An additional critical illness cover cash of either £15,000 or 20% of the critical illness cash sum, whichever is lower of the two

AND/OR

A children’s critical illness cover payment of £25,000 or 50% of the critical illness cash sum, whichever is the lower

Please note that the plans would not have a cash-in value in any circumstances.

Company would not facilitate pay off for life cover if:

• Due payments are not made

• The policyholder commits suicide within a year of commencement of policy or reinstating of the policy.

• The illness you claim for does not fall in the terminal illness category.

Payoff for critical illness cover will not be made in the following cases:

• Non-payment of dues

• The illness is not covered by the plan or does not exactly meet the plan definition

• In conditions when a child cover is claimed and the child does not survive at least 14 days from the date of diagnosis and operation.

• The company is not informed about the claim on time. The time here is defined as the period within six months of suffering or operation

• If you caught up with the illness while staying abroad and you do not return to any of the countries specified in the policy.

• If the claim is made for a child suffering from a medical condition that already existed before the start of the policy. Please note that this holds true even if the disease showed any symptoms or not.

• In case the claim is made for an adopted child who suffered from the ailment at the time of adoption.

Depending on the person’s current health and family history, the company may mention additional exclusions on the individual’s plan.

How to cancel the plan?

This is possible within 30 days of taking out the plan. If the policyholder changes mind then he has 30 days for cancelling the policy. He/she needs to inform the insurer within the first month of taking the policy. The money paid for the plan will be refunded but if it happens after 30 days then there would be no refund.

How to make a claim?

Claims can be made by informing Zurich. Contact them on 0370 243 0827 between Monday to Friday 9 am to 5 pm.

They will then inform you the procedure in detail. Check section 7 of the plan and inform Zurich within the stated time limit.

What about tax?

You do not need to pay any taxes if the plan is written in trust. If you have not written in trust then the pay-out is considered as part of the estate or property and thus inheritance tax. If the plan is named under a company then it would incur corporation tax.

Check with your advisor how to write the policy in trust before you actually buy it.

For more details about Level Protection Plan from Zurich, or comparing other plans from UK insurers, do check our website freepricecompare.com or call us on 02034757476.

Kevin Patterson