Download Income protection

To commence this letter, please include the “Introduction to suitability letter”
section and amend as necessary.
The introduction can be found within the
“Suitability letters” section of the document library.
Income protection
The reasons for my recommendation are based on the key issues arising from the confidential
fact find. The key issues identified are summarised as follows:
(At this point details of the clients needs should be summarised from the fact find
and should include areas such as the term, sum assured, current circumstances, any
prospective circumstances, budget amount, existing insurance/protection details,
clients own views etc)
Recommendation
 Provider
 Product
Reasons for my recommendation
(Ensure that the selected wording is correct and relevant to the individual client)
I have recommended an Income Protection policy because
a) You are self-employed and would therefore receive very limited help from the state
should you be unable to work due to sickness or accident.
b) Your employer’s provision would be insufficient should you be unable to work for a
prolonged period due to sickness or accident and State provision would be
insufficient.
c) Your current level of income protection is insufficient to meet your needs should you
suffer long-term sickness or an accident that prevents you from working.
Additional/alternative cover is required and an Income Protection policy provides
you with a tax-free income to help maintain your standard of living/mortgage
payments.
d) If you fall ill or are injured and unable to work, you will receive an income until you
are well enough to return to work you die, or the policy reaches its finishing date.
e) You wish to have sufficient income on a monthly basis to pay your bills and other
financial commitments for 1 or 2 years due to illness or injury.
f)
Other reason – free type
I have recommended this cover for a term of (enter term) years because (enter reason)
The policy has a (deferred/multi-deferred) period of (enter period/s) during which no
benefits will be payable. I recommend this (deferred/multi-deferred) period because (enter
reason)
This cover will cost £(insert premium), payable on (a monthly/an annual/a quarterly) basis
this fits into your budget of £(enter budget amount).
If you keep your policy for X years, the total premium you will have paid will be £XXXX. This
assumes that your premium remains unchanged.
(X = mortgage term, policy term or term to retirement if plans ends on retirement)
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If your monthly premium changes for any reason, the actual amount you will have paid over
the term of the policy will be different from this figure.
Your monthly premium may change if you have selected an automatic increase option e.g.
annual inflation linking. Your monthly premium may also change as a result of a premium
review of if you have altered or increased your policy in any other way.
The following paragraphs relate to the Indexation Option for Exeter Family Friendly Income
Protection products. Please select the appropriate costing for your recommendation
Income One
You do not wish your cover to increase in line with inflation and understand the implications of
this decision.
Or
Your cover will increase in line with inflation. Each year your benefit will be adjusted based on
the rise in the Retail Price Index, which records rises in the price of goods that you buy.
Exeter Family Friendly will write to you to let you know of any increase and advise you of your
new premium.
Pure Protection
You do not wish your cover to increase in line with inflation and understand the implications of
this decision.
Or
Your cover will increase in line with inflation. Each year your benefit will be adjusted based on
the rise in the Retail Price Index and the Average Weekly Earnings Index, which records rises
in the price of goods that you buy. Exeter Family Friendly will write to you to let you know of
any increase and advise you of your new premium
Bills & Things
Your cover is automatically increased in line with inflation according to the Retail Price Index.
Exeter Family Friendly will write to you before any increase is applied.
I recommend (enter provider) because (enter reason)
The policy will start when your application has been accepted by (enter provider)
OR
The policy should start on (enter date) because (enter reason)
Important
My recommendations are based upon the information provided however, as you were
unable/unwilling to provide full details of your current arrangements, you may affect the
suitability of the policies recommended.
We have talked through the relevant parts of the policy document/Key Features
Document/Statement of Price and I have drawn your particular attention to the following
points:
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The aims of the plan
Significant benefits
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Limits and exclusions
The duration of the plan
The price of the plan
When it will pay out
What conditions are covered by critical illness and the definitions
When the plan will not pay out
The risk factors
I have verbally explained in greater detail the following points to you:
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What the product is and why it is important
Why I have recommended single plans or joint cover
That the selected method of payment will be a lump sum or a regular monthly payment
The limitations of the cover
That the policy covers the illnesses listed and no others
The amount and basis of the premium
The importance of disclosing all relevant facts accurately
I have explained that this policy is to protect your income in the event of illness or
disability
That a defined % of your income is paid out if you are unable to work
That the policy can be arranged to a specific date
That you can cover approx 50% of your gross income
That there are various deferred periods available to you and that this will affect the
premium
That the policy will cease when you return to work or if death occurs
(IF AN EXISTING POLICY IS BEING REPLACED)
My recommendation is to replace your existing policy because (enter valid reason for
replacing existing cover).
Replacing an existing contract
When replacing an existing non-investment insurance contract, the recommendation must
evidence how the new contract is more suitable than the existing contract.
Please enter
reasons here. For guidance, please refer to “Replacing existing contracts” in the document
library, under “Training & Competency”.
I have verbally explained the following points to you:
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Why the new contract is more suitable for you than the previous contract
That we have compared the main exclusions
The cost comparison between the new contract and the previous contract
That some of the illness definitions in the new contract are different to the previous
policy and that you have considered this
That there may be defined illnesses in your previous contract that you will not be in a
position to make a claim with the new contract
That you have considered guaranteed or reviewable premiums
That you will not cancel your existing contract until the new policy is in force
Please ensure that you do not cancel your existing policy until your new policy has
been put in force.
I confirm that you do not have any existing policies that could be used to provide the same
benefits as the plan that I have recommended.
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OR
I did not recommend using any existing policies to provide you with the same benefits as the
plan that I have recommended because (enter reasons).
I have considered the following alternative products (enter any products that have been
discounted) and believe that none of these are as suitable because (enter reasons).
Benefits over Cost
I have made you aware that there was a less expensive alternative provided by (enter
provider name) which I did not recommend because (enter reason). The difference in cost
over the full term of the plan, between the policy I have recommended and the cheaper
alternative is (enter amount – e.g. if the cheaper alternative policy is £2 per month
less, on a 20 year policy, the amount will be £480)
Waiver of Premium (WOP)
I have explained the advantages of incorporating this benefit into your income protection
plan, these are (enter benefit) and you have (accepted my recommendation / declined my
recommendation because - enter reason e.g. you felt that your existing provisions would be
adequate etc. / inadequate but you felt that this was outside your current level of
affordability.)
OR
Waiver of Premium is not available on this type of policy.
Guaranteed Premiums
You have chosen premiums on a guaranteed basis. This means your premiums will stay the
same throughout the term of your plan.
OR
Reviewable Premiums
You have chosen reviewable premiums. This means that the premiums are likely to change
over the term of your plan. Initially reviewable premiums will be cheaper than guaranteed
premiums. A possible advantage of reviewable premiums is that they can be more affordable
than guaranteed premiums at the outset of your plan, making cover more affordable
when your plan starts. Over time however, the premium is likely to increase. As a result, the
overall cost could surpass that of a guaranteed premium.
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The following paragraphs relate to costings for Exeter Family Friendly Income Protection
products. Please select the appropriate costing for your recommendation:
Age-Costed Premiums
Premiums are priced according to your age, so they will rise every year/as you get older.
Guaranteed Premium Rates for Income One
Your premiums are calculated using rates which change yearly for your increasing age,
together with your personal circumstances and the policy details you select. Please refer to
your quotation and the premium tables in your Key Features Document.
Reviewable Premiums for Pure Protection
Your costs are based on rates which change for your increasing age. Please refer to your
quotation and the premium tables in your Key Features Document. The rates shown in the
tables are reviewable and can increase or decrease each year. You will be advised in advance
of any changes, by Exeter Family Friendly.
Reviewable Premiums for Bills & Things
Your costs are based on premiums which rise in line with your increasing age. Premiums will
not be reviewed within the first three years, however after this period they can increase or
decrease. You will be advised in advance of any changes, by Exeter Family Friendly.
We discussed the potential consequences of failing to have protection, however you declined
my recommendation because (enter reason)
There may be other benefits that can be added to the policy in addition to Waiver of
Premium and Critical Illness all benefits taken with the policy should be documented.
Commission
Pink Home Loans will receive a commission of £X for arranging this policy. A percentage of this
amount will be paid to me when the policy is activated.
To finish this letter, please include the “Closing summary suitability letter” section
and amend as necessary. The closing summary can be found within the “Suitability
letters” section of the document library.
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