2012 Star Ratings. A summary of preliminary criteria. Income Protection Insurance

Transcription

1 01 Star Ratings A summary of preliminary criteria Income Protection Insurance

2 Table of contents About Defaqto... An introduction to Star Ratings and our methodology... Rating criteria... 5 Core criteria... 6 Star Rating boundaries... 6 DNA scoring criteria... 7 Promoting your Star Rating Defaqto s Insight Team Tables Table 1 Income Protection Insurance criteria... 5 Table Star Rating score boundaries for Income Protection Insurance... 6 Table Star Rating criteria descriptions for Income Protection Insurance... 15

3 About Defaqto Defaqto is an independent financial research company specialising in rating, comparing and analysing financial products. Since 199, Defaqto has built the largest, whole of market, financial product database and become one of the leading providers of financial product data in the UK. We now cover over 0,000 products across banking, life, pensions, investments and general insurance. Our experts validate and analyse the data to provide insight and consultancy to all layers of the financial services sector including IFAs, mortgage and general insurance brokers, providers, web aggregators and the public sector. For further information please contact us on or speak to your Defaqto Account Manager.

4 An introduction to Star Ratings and our methodology Since 000 Defaqto has been producing Star Ratings for a wide range of financial product areas. These have been created to help consumers, and in some cases financial advisers, identify at a glance which products could be suitable for their needs based on the cover and features they offer. Our Star Ratings are calculated using a scoring method called Data Numerical Analysis (DNA). Each product feature and benefit is scored from 1 to 5, with a score of 5 denoting that the product has the highest characteristics in the market for that feature or cost; a score of 1 indicates it has the lowest. Totalling the individual DNA scores across any chosen range of features and benefits gives an overall DNA score, which can be used to rank products in terms of their overall benefit to consumers. Using our expert industry and product knowledge and our DNA scoring methodology above, our research and insight analysts have created Star Ratings for Income Protection Insurance. We have decided on which criteria are used to compare the products available in the current market and chosen each of the Bar levels for the 5,,, and 1 Star Rated products. We invited representatives from across product providers of Income Protection Insurance to a discussion forum and feedback from these sessions has been reviewed and considered as part of our decision making process. These updated DNA scorings feed into our data, research and comparison tools, Aqueous Online and Compare, and allow qualitative comparisons of product features and benefits available across most financial industry sectors. For further information on these tools please contact us on Our 01 Star Ratings will run from the 1 st February 01 to 1 st January 01.

5 Rating criteria For the Income Protection Insurance Star Ratings the following criteria have been chosen and used in our decision-making process. Feature or benefit Underwriting Process Employed Houseperson Maximum Benefit POS Decision Given Carers Benefit Premium Discounted when Elements of Cover Excluded Relapse period Financial Underwriting Hospitalisation benefit Annual Statement Issued Effective Max % for 5k Termination Age Effective Max % for 50k Limited Benefit Term P11D Benefits Included Option to Increase or Decrease Deferred Period Dividend Income Included Option to Increase or Decrease Term State Benefits Deducted Option to Increase or Decrease Benefit Continuing Income Deducted GIO - Set Intervals Other Insurance Deducted GIO - Maximum Age Pension Income Deducted Mortgage/Loan Maximum Increase Own Occupation Throughout Claim Promotion/Salary Maximum Increase Deferred Period Benefit Amount - Index Link 1 Day Deferred Period Additional Indexation Two Deferred Periods No. of Indexation Refusals Range of occ definitions coverage Indexation Costing Basis Claims Support Services Included WOP deferred as IPI Health & Wellbeing Services Included Guaranteed Premium Rates Claims Stats Published Reviewable Premium Rates Number of Exclusions Career Break Table 1 Income Protection Insurance criteria

6 Core criteria For Income Protection Insurance products there are no core criteria set in for the 01 Star Ratings. Star Rating boundaries Based on our analysis of the current and likely DNA scores of products in the income protection insurance market, and any planned changes to DNA scoring bands as described overleaf, the Star Rating boundaries for 01 will be as follows: Star Rating Product DNA Score * < 85 ** >= 85 *** >= 101 **** >= 10 ***** >= 157 Table Star Rating score boundaries for Income Protection Insurance

7 DNA scoring criteria As part of our preparation for 01 Star Ratings, we have reviewed product DNA scores. The proposed DNA scoring bands, which will be used, are shown in the tables below. Some amendments may occur before a final release for 1 st February 01. Underwriting Process Employed Underwriting process employed 1 No tele-underwriting Online submission or little t tele-underwriting Online submission and little t tele-underwriting Big T tele-underwriting 5 Big T tele-underwriting POS Decision Given A decision can be given at point of sale 1 A decision cannot be given at point of sale 5 A decision can be given at point of sale Premium Discounted when Elements of Cover Excluded Provider discounts premiums where an element of cover has to be excluded 1 Premiums not discounted for exclusions 5 Premiums discounted for exclusions Financial Underwriting The point at which financial underwriting is applied 1 Financial underwriting undertaken at claim and inception Financial underwriting undertaken at claim stage Financial underwriting undertaken at inception 5 Financial underwriting undertaken at claim or inception, or no financial underwriting

8 Annual Statement issued Annual statements are issued 1 Annual statements are not issued by the provider 5 Annual statements are issued by the provider Termination Age The range of ages to which the plan can run 1 One specific age only All ages from 50 to 60 or two specific ages All ages from 50 to 6 All ages form 50 to 67 or a full range of specific ages 5 All ages from 50 to 69/70 or more Limited Benefit Term Option for benefits to be paid for a limited period 1 Limited benefit 1 option Limited benefit term or more options Full term only Full term plus 1 limited benefit term option 5 Full term plus or more limited benefit term options Option to Increase or Decrease Deferred Period Vary the deferred period after start date (other than GIO) 1 Deferred period may not be increased or decreased Deferred period may be increased or decreased 5 Deferred period may be increased and decreased Option to Increase or Decrease Term Vary the retirement age after start date (other than GIO) 1 Term may not be increased or decreased Term may be increased or decreased 5 Term may be increased and decreased

9 Option to Increase or Decrease Benefit Vary the benefit amount after start date 1 Benefits may not be increased or decreased Benefits may be increased or decreased 5 Benefits may be increased and decreased GIO - Set Intervals Guaranteed insurability available at set intervals 1 Guaranteed insurability at regular intervals not available 5 Guaranteed insurability at regular intervals is available GIO Maximum Age Maximum age to exercise guaranteed insurability option 1 Maximum age for increase less than 50 Maximum age for increase 9 or 50 5 Maximum age for increase greater than 50 Mortgage/Loan Maximum Increase Maximum increase available for mortgage/loan option 1 GIO on mortgage/loan increase not available Maximum GIO on mortgage/loan,000 or less Maximum GIO on mortgage/loan between,001 and 8,000 5 Maximum GIO on mortgage/loan greater than 8,000 Promotion/Salary Maximum Increase Maximum increase available for promotion or salary increase GIO 1 GIO on promotion or salary increase not available Maximum GIO on promotion or salary increase,000 or less Maximum GIO on promotion or salary increase between,001 and 8,000 5 Maximum GIO on promotion or salary increase greater than 8,000

10 Benefit Amount - Index Link Benefit amount index linked 1 Benefit not indexed Plan only available with indexation 5 Indexation available as an option at outset Additional Indexation Indexation can be added to the plan after commencement 1 Indexation cannot be added after commencement 5 Indexation can be added after commencement No. of Indexation Refusals Number of refusals before indexation ceases to be offered 1 The offer to index can be refused only once The offer to index can be refused twice The offer to index can be refused three times The offer to index can be refused four or more times 5 The offer to index can be refused any number of times Indexation Costing Basis Age used when costing indexation increases 1 Indexation not available Based on age attained or on age at outset plus a factor of 1.+ Based on age at outset plus a factor of <1. 5 Based on age at outset WOP Deferred as IPI Waiver of premium (WOP) deferred period as main policy benefit deferred 1 Deferred period for waiver longer than for main benefits Deferred period for waiver same as main benefit As benefits deferred period plus refund of premiums paid in deferred period 5 Waiver of premium commences before longer deferred periods

11 Guaranteed Premium Rates Guaranteed premium rates available 1 Premium rates are not guaranteed 5 Premiums are agreed at outset Reviewable Premium Rates Reviewable premium rates 1 Premiums reviewable at any time or age related Renewable premiums annually reviewable or guaranteed only Premiums guaranteed for five years then reviewed at any time Premiums guaranteed for five years then reviewed annually 5 Premiums guaranteed for five years then reviewed five yearly Career Break Career break available 1 No career break allowed Houseperson cover applied no reduction Houseperson cover applied reduced premium 5 Premiums and benefits suspended Houseperson Maximum Benefit Maximum housepersons' benefit 1 Housepersons benefit less than 5,000 pa. Housepersons benefit between 5,000 pa and 9,999 Housepersons benefit between 7,500 and 1,000 Housepersons benefit between 1,000 and 15,000 5 Housepersons benefit greater than 15,000 pa Carers Benefit Benefit payable for carers 1 Carers benefit not available 5 Carers benefit available

12 Relapse Period Relapse qualifying period 1 Relapse covered within three months Relapse covered within six months 5 Relapse covered within 1 months Hospitalisation Benefit Hospitalisation benefit available 1 Not available 5 Hospitalisation benefit available Effective Maximum % for 5k Effective maximum % benefit for income of 5k 1 Effective maximum benefit less than 50% Effective maximum benefit between 50% and 60% Effective maximum benefit equal to 60% 5 Effective maximum greater than 60% Effective Maximum % for 50k Effective maximum % benefit for income of 50k 1 Effective maximum benefit less than 50% Effective maximum benefit between 50% and 65% Effective maximum benefit equal to 60% 5 Effective maximum benefit 60% or greater P11D Benefits Included Benefits in kind are included in income calculation 1 P11D benefits excluded 5 P11D benefits included

13 Dividend Income Included Dividend income is included in income calculation 1 Dividend income excluded 5 Dividend income included State Benefits Deducted State benefits deducted from benefit amount 1 State benefits deducted 5 State benefits not deducted Continuing Income Deducted Continuing income deducted from the benefit amount 1 Continuing income is deducted Continuing income only deducted if maximum benefit exceeded 5 Continuing income not deducted Other Insurance Deducted Income from other insurances deducted from the benefit amount 1 Other insurance income is deducted Other insurance income only deducted if maximum benefit exceeded 5 Other insurance income not deducted Pension Income Deducted Pension income deducted from the benefit amount 1 Pension income is deducted Pension income only deducted if maximum benefit exceeded 5 Pension income not deducted

14 Own Occupation Throughout Claim Own occupation definition of disability available throughout a claim 1 Own occupation definition not offered Own occupation for initial period only 5 Own Occupation definition of disability throughout available Deferred Period Range of deferred periods available 1 Offers one deferred period only Offers more than one deferred period but not, 1, 6 & 5 wks Offers, 1, 6, 5 wks deferred Offers, 1, 6, 5 wks deferred plus one other 5 Offers, 1, 6, 5 wks deferred plus two others 1 Day Deferred Period One week deferred period 1 One day deferred period not available 5 One day deferred period available Two Deferred Periods Two deferred periods in one plan 1 Not available 5 Two deferred periods available Range of occ definitions coverage Coverage of occupation classes by occupation definitions 1 Poorest range of occupation classes covered Below average range of occupation classes covered Average range of occupation classes covered Above average range of occupation classes covered 5 Widest range of occupation classes covered

15 Claims Support Services Included Claims support services included 1 Claims support services not included 5 Claims support services included Health and Wellbeing Services Included Health and wellbeing services included 1 Health and wellbeing services not included 5 Health and wellbeing services included Claims Stats Published Provider publishes claims paid statistics 1 Claims stats are not published by the provider Claim stats cannot be published due to insufficient claims 5 Claims stats are published by the provider Number of Exclusions Number of exclusions applying to the plan 1 More than 10 exclusions Eight - 10 exclusions Seven exclusions Four to six exclusions 5 Three exclusions or less Table Star Rating criteria descriptions for Income Protection Insurance

16 Promoting your Star Rating We have a wide range of free resources to help you promote your Star Rating both internally to your employees and consumer facing teams as well as to your customers. A regularly updated online toolkit Communications templates, for example, posters, postcards, flyers and leaflets Examples of communications material Training events for your marketing teams Stock content for communications and press releases You ll receive access to these resources upon confirmation of your licence. We can also arrange bespoke brainstorming or visioning sessions with your product and marketing teams and/or creative agencies. Please ask your Account Manager for more information. Defaqto s Insight Team In addition to generating Star Ratings, and a regular series of Insight Reports, Defaqto s Insight Team offers a wide range of consultancy services, including: Product analysis and product positioning Whole of market product reviews Creation of Best Advice Panels Authoring of sponsored market or product guides Consumer research. For more information about our Insight Team please visit