LV= has launched a pair of protection products to help cover the income and outgoings of people on irregular pay or working in small businesses.
The insurer said the mortgage and rent product aimed to help the UK’s millions of workers with irregular income access protection for their housing costs.
And its executive income protection (IP) cover is designed to help smaller businesses provide sick pay benefits to their employees.
Mortgage and Rent Cover
The mortgage and rent cover adopts an outgoings-based approach, targeted at regular earners or those with variable incomes who want to protect their mortgage or rent outgoings.
It provides protection with no evidence of minimum hours worked or proof of income required, when applying or making a claim.
Should the customer be unable to work due to illness or injury, their mortgage or rental payments on their main residence will be covered up to £2,000 a month for a maximum of one or two years per claim.
As part of the application process advisers need to validate that the cover amount does not exceed the customer’s mortgage or rent payments, and obtain documentary evidence from the customer to support this, such as a copy of their mortgage offer or formal rental agreement.
The level of cover is adjustable by the customer during the lifespan of the policy to account for life events such as moving house.
Designed with non-traditional workers in mind
Elaborating on the design of the product, Justin Harper, protection proposition and marketing director at LV=, told Health & Protection that the insurer had been seeking to better understand the growing non-traditional worker market and changing work dynamics for a couple of years.
“People in this growing market segment tend to be more financially vulnerable to income shocks – and traditional IP doesn’t always work for them,” he said.
“Throughout we’ve undertaken adviser and consumer reach into attitudes, challenges and how income protection might work differently.
He noted there were more than 4.7 million non-traditional workers currently in the UK, including freelancers, sole traders and zero-hours workers.
“Vulnerability to income shocks has become even more pronounced and exposed since the pandemic struck. In 2020, 70% of non-traditional workers surveyed were most interested in guarantees that payouts would cover their mortgage or rental payments,” he added.
Harper also noted that while the product as available to all working people, advisers found it challenging to find the right products for those with varying earnings or work patterns.
“Those who maybe work zero-hour contracts, have multiple jobs or are in the gig-economy will find it hard to prove a consistent income every month,” he continued.
“Our research revealed that over half (53%) of advisers recognised that proving income is a barrier to writing income protection business.”
Executive Income Protection cover
LV= has also launched an IP plan designed for smaller businesses that find it difficult to access group protection, offering monthly sick pay benefits to key employees.
If an employee is unable to work due to illness or injury, the employer can make a claim, and uses the payments to provide sick pay to their employee via PAYE in place of their employee’s monthly salary.
The insurer will cover 80% of their earnings up to £300,000 a year for level cover and £225,000 a year for inflation-linked cover.
Additional cover can also be taken out for employer pension scheme contributions and National Insurance employer contributions.
As long as a claim is not being paid at the time, if the covered employee leaves their place of work, the policy can be transferred to their new employer within 90 days if the employee wants to keep their protection in place after changing jobs.
The policy can be included as part of the same application for other LV= business protection policies and employers can also benefit from the insurer’s free business care service offering legal, tax and VAT advice.