Scottish Provident: Pegasus Whole of Life
Scottish Provident
The Product
Scottish Provident has converted its existing Pegasus whole of life policy from being a unit linked plan to being a pure protection life cover only policy, with no investment element. This avoids adverse RDR (Retail Distribution Review) implications and the updated plan can therefore be sold under ICOBS rules.
The plan has optional guaranteed or reviewable rates, waiver of premium is available and rates are already gender neutral and take account of I-E tax changes. The plan pays a lump sum benefit on death, whenever that may occur, or on diagnosis of a terminal illness. Waiver of premium benefit is also available as are increase options to cover life changes such as marriage, business options and IHT provision.
The plan is available on a single life, or joint life first or second death basis and pays 135% Lautro initial commission, enhanced by 15% of Lautro for online applications.
The plan has no surrender or paid-up value at any time. For intermediaries, a useful guide to the changes is available online.
The Company
Scottish Provident is a leading protection insurer and part of the Royal London Group, along with sister protection office Bright Grey.
Contact Details
Website: www.scottishprovident.co.uk
Telephone: See website for details of most appropriate contact numbers.
The Literature
See website for more details.
What They Say
Senior product development manager Jennifer Gilchrist said: “Our new Pegasus plan complies with unisex pricing as we approach the changes to the EU Gender Directive. We’ve also removed the investment element, which will allow ICOBS-registered advisers, as well as investment advisers, to recommend it. As the emphasis on providing holistic financial planning continues to gain momentum, the focus on multi-usage whole of life will grow. Customers also have the reassurance of our strong claims history that paid out over £15m last year.”
What We Say
Andy Couchman
"Scot Prov has taken the very pragmatic step of making its Pegasus plan more widely available through intermediaries post RDR. In doing that, it has effectively also moved the plan to become a ‘simplified product’ [in its broadest sense], simply by converting it from an ‘investment’ product to a ‘pure protection’ one.
"The timing is significant and, going forward, the full fat [rather than low premium guaranteed acceptance funeral type plans] whole of life plan could see a resurgence, both as part of inheritance tax [IHT] planning but also enabling more people to build up assets for their children outside their estate[through use of a suitable trust] - a factor that could grow in importance in a long-term sluggish economy.
"Downsides? – anyone who no longer needs the cover will not be able to ‘sellback’ their plan to realise a surrender value – although the plan might be able to be sold on to an investor instead. If the whole life market does grow appreciably in future, the industry may benefit from a well-run market to do just that, not least to avoid accusations of not treating customers fairly by putting adviser interests [the plan can be sold by ICOBS intermediaries and all brokers can be remunerated by commission on the plan] ahead of customer interests [whole life plans build up a reserve value – why should customers be deprived of accessing any part of that?]."
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