Friends Life Protection Account Key features of Critical Illness Cover

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1 Protection Friends Life Protection Account Key features of Critical Illness Cover Why is this document important? The Financial Services Authority is the independent financial services regulator. It requires us, Friends Life Company Ltd, to give you this important information to help you to decide whether the Friends Life Protection Account s Critical Illness Cover is right for you. You must read this document carefully so that you understand what you are buying and keep it safe for future reference. The purpose of this document is to help you make an informed decision. This document introduces you to the key features, benefits and risks of Critical Illness Cover. Where relevant information is contained in other documents these will be signposted at the appropriate point. Full terms and conditions can be found in your Account pack. This will be sent to you when your cover starts. If you would like a sample Account pack, please ask your financial adviser. You need to be comfortable that you understand the benefits and risks before deciding to take cover out. You should also speak to a financial adviser before making any decisions about this cover. What other documents should I read? It s important you read this document with: Your Quotation summary The Key features of the Friends Life Protection Account Our leaflet, There is such a thing as Free Cover The Friends Life Protection Account Critical Illness Guide You should contact your financial adviser if you need copies of these or any of the other documents mentioned in this document.

2 Critical Illness Cover Its aims, your commitment and risk factors What is Critical Illness Cover? Critical Illness Cover is insurance that pays out a one-off lump sum if on or before the cover end date a person covered is diagnosed with a critical illness for which they are covered from our list (see page 4), or undergoes a specified surgical procedure, or meets our definition of a terminal illness or total and permanent disability if this option is chosen. A terminal illness is an advanced rapidly progressing incurable illness that, in the opinion of an attending Consultant and our Chief Medical Officer, means the person covered is expected to die within 12 months of diagnosis and before the relevant cover end date. Total and permanent disability is an extra cost cover option that you can select. It is designed to cover other chronic conditions and circumstances (including serious injury or accident) that are not included under Critical Illness Cover that result in total and permanent disability. Should I consider taking out Critical Illness Cover? You should consider taking out Critical Illness Cover if you: want Critical Illness Cover for a fixed period of between five and 40 years, providing that cover ends on or before your 70th birthday, live in the UK, and are aged between 18 and 64 when cover starts. Its aims To pay out a one-off lump sum if on or before the cover end date, a person covered: survives for at least 14 days after being diagnosed with a critical illness for which they are covered from our list, is diagnosed as suffering from a terminal illness that meets our definition, undergoes one of the specified surgical procedures, or meets our definition of total and permanent disability if cover for this has been chosen. The cover will then end. This applies whether one or two persons are covered. If the cover is written in trust, we will pay the benefit to the nominated trustees. 2

3 Your commitment You must: provide full and true answers to the best of your knowledge when applying. If you do not the insurance may not protect you in the event of a claim, tell us about any changes to health, family history, occupation, travel or pursuits that occur between completing the application and your cover start date. Please contact your financial adviser or phone us on We are open 8am to 6pm, Monday to Friday, make regular payments to us when they are due, give full and true answers in the event of a claim (this also applies to your personal representative), make sure you are aware of and understand any exclusions and restrictions that may apply. These can be found in your Account pack. Risks Acceptance of your application is not automatic. When you apply we assess the risk of providing you with the cover you have applied for based on your health, family history, occupation, travel and pursuits. This is known as underwriting. If we are unable to offer you cover on our standard terms, we will contact you to explain the terms we can offer or the reasons why we cannot cover you. If you fail to meet the commitments described in Your commitment it may result in a claim not being paid. If you ask us to increase the amount or extend the length of your cover after it starts, we may need up-to-date underwriting information. If this information has changed since you applied and increases our risk of providing cover to you we may: not allow the change to happen, limit the change, increase the payment to us, or add an exclusion. The amount of cover chosen is not guaranteed to repay an outstanding mortgage or loan in the event of a claim, even where cover has been taken out for this purpose. For more information, please read the Types of Cover section on page 8. Over time, the effect of inflation could reduce the value of your amount of cover. In other words, what your amount of cover could pay for in the future may be less than it could pay for today. If you choose cover on a reviewable basis, you may need to increase your payments to us in the future. See page 9 for further details. Regular reviews with an authorised and regulated financial adviser can help you to ensure that your cover continues to meet your needs. 3

4 Questions and answers about Critical Illness Cover Am I covered while my application is being processed? When you apply for Critical Illness Cover we will provide you with an amount of temporary Free Cover. This covers you between sending us your application and your cover start date providing all of the following apply: you are a UK resident, you are aged 59 or under when we receive your application (for joint cover both applicants must be aged 59 or under), you are not applying to other companies for similar cover, and we have received a fully completed application and direct debit instruction. The amount of Free Cover we would pay in the event of a claim is the lower of: the amount of Critical Illness Cover you have applied for, and 350,000. The terms of the Free Cover vary according to whether or not your application is related to a mortgage. For the purposes of Free Cover, a mortgage related application is one that involves the purchase of a home. We reserve the right to amend or remove the Free Cover at any time and without any prior notice for new applications. For the full terms and conditions that apply to Free Cover you should refer to our leaflet There is such a thing as Free Cover. Please ask your financial adviser or us for a copy if you do not have one. What are the critical illnesses covered? Alzheimer s Disease Aorta Graft Surgery for disease or traumatic injury* Aplastic Anaemia of specified severity Bacterial Meningitis resulting in permanent symptoms Benign Brain Tumour resulting in permanent symptoms or requiring invasive surgery* Blindness permanent and irreversible* Cancer excluding less advanced cases* Cardiomyopathy with permanent symptoms of specified severity Coma Coronary Artery By-pass Grafts* Creutzfeldt-Jakob Disease (CJD) resulting in permanent symptoms Deafness permanent and irreversible* Encephalitis resulting in permanent symptoms Heart Attack of specified severity* Heart Valve Replacement or Repair* HIV Infection caught in one of the permitted countries from a blood transfusion, a physical assault or at work in an eligible occupation* Kidney Failure requiring dialysis* Liver Failure end stage Loss of Hand or Foot permanent physical severance* Loss of Independent Existence 4

5 Loss of Speech permanent and irreversible* Major Organ Transplant* Motor Neurone Disease Multiple Sclerosis with persisting symptoms* Open Heart Surgery with surgery to divide the breastbone Paralysis of Limb total and irreversible* Parkinson s Disease Pre-senile Dementia Primary Pulmonary Hypertension of specified severity Progressive Supranuclear Palsy resulting in permanent symptoms Rheumatoid Arthritis resulting in permanent symptoms Severe Lung Disease of specified severity Stroke Systemic Lupus Erythematosus (SLE) of specified severity Third Degree Burns covering 20% of the body s surface area or affecting 30% of the surface area of the head and neck or 50% of the face* Traumatic Head Injury * Conditions marked with an asterisk follow the definitions of critical illness set down by the Association of British Insurers (ABI) in April Some forms of illness such as certain types of cancer are not covered. You must read the Friends Life Protection Account Critical Illness Cover Guide which gives full information and the circumstances in which a claim can be made. Please speak to your financial adviser for a copy. Does Critical Illness Cover include anything else? Yes. Critical Illness Cover also includes: Accident Hospitalisation Cover A one-off lump sum payment (per person covered) of the lower of: 20% of your amount of cover, or 50,000 if the person covered is: injured as a result of a serious accident, admitted to hospital with a severe physical injury, and confined to hospital for at least 28 consecutive days. Claims paid under this cover are in addition to the amount you can claim under your main Critical Illness Cover. Only one claim can be made per person covered. Children s Cover A one-off lump sum payment of the lower of: 50% of your amount of cover, or 25,000 if an eligible child is diagnosed with a critical illness from our list. An eligible child is one that: has been born to a person covered, legally adopted by a person covered, acquired by them through a legally recognised marriage or civil partnership or for whom the person covered is a legal guardian, and is aged over 30 days and is under the age of 18, or under the age of 21 and in full-time education. We will not pay out if: the illness is due to a congenital condition; the illness existed before the child was eligible or cover started; or a claim has already been paid in respect of the eligible child. Where an eligible child is covered under more than one Account because of a different person covered, a claim for Children s Cover can be made within each Account, up to 25,000 per Account. The overall maximum amount claimed per eligible child cannot exceed 50,000, regardless of the number of Accounts held. Claims paid for Children s Cover in no way affect any other covers you have or the overall amount you can claim under your Critical Illness Cover. 5

6 Questions and answers about Critical Illness Cover Major Heart Surgery Cover A payment made directly to the hospital for providing any one of the following types of surgery privately in connection with a critical illness from our list: Coronary artery by-pass grafts Aorta graft surgery for disease or traumatic injury, or Heart valve replacement or repair. This is an advance payment made from your main Critical Illness Cover and will be deducted from your overall amount of cover. The person covered must be on the approved NHS waiting list for this surgery to qualify. This cover also applies to eligible children subject to eligibility requirements and exclusions under the Children s Cover. Total Mastectomy Cover A one-off lump sum payment of the lower of: 20% of your amount of cover, or 15,000 if the person covered is diagnosed with carcinoma in-situ of the breast and this has been treated by total mastectomy. Only one claim can be made per cover under this benefit, irrespective of the number of people covered. Claims paid under this cover are in addition to the amount you can claim under your main Critical Illness Cover. Low-grade Prostate Cancer Cover A one-off lump sum payment of the lower of: 20% of your amount of cover, or 15,000 if the person covered is diagnosed with Low-grade Prostate Cancer by a Consultant Oncologist and treatment of the tumour by complete removal, external beam or interstitial implant radiotherapy has taken place. Replacement Cover If you take out joint cover and a claim is paid, the joint cover will end. Replacement Cover lets the nonclaiming person continue cover as a single person without the need for further underwriting. To qualify for Replacement Cover the persons covered must: be aged 50 or under and accepted on standard terms at the start of the cover. The non-claiming person must be aged 55 or under when they buy the Replacement Cover. The new payments to us will be based on the age and smoker status of the person covered when the Replacement Cover starts. What other benefits can I take out with Critical Illness Cover? Total and Permanent Disability When you take out Critical Illness Cover you can also choose to pay extra for cover against Total and Permanent Disability. This pays out a one-off lump sum if you become totally and permanently disabled as a result of an illness or injury. Different definitions of total and permanent disability apply depending on your age and circumstances but in all cases the disability leading to a claim must be permanent and irreversible. If Total and Permanent Disability is included with Critical Illness Cover, it will be shown on your Quotation summary and in the Account pack we send when cover starts. This will also include confirmation and an explanation of the definition we will use if you need to make a claim. Only one claim can be made per cover under this benefit, irrespective of the number of people covered. Claims paid under this cover are in addition to the amount you can claim under your main Critical Illness Cover. 6

7 When won t Critical Illness Cover pay out? Any claim may not be paid if: the relevant definition has not been met, the person covered does not survive for 14 days after diagnosis of a critical illness from our list, we were not advised about changes to health, family history, occupation, travel or pursuits that occurred between completing the application and the cover start date, full and true answers were not provided on your application or claim form, the cause of the claim relates to an exclusion on the cover schedule of the person covered, incomplete or inaccurate medical or other evidence has been provided, the claim was caused by unreasonable failure to follow medical advice, the claim was caused by intentional self-inflicted injury, the claim arose directly or indirectly through Human Immune Deficiency Syndrome (HIV), Acquired Immune Deficiency Syndrome (AIDS) or a related complex (except in the circumstances described in our critical illness list), or the person claiming is not in, or does not return to, one of the permitted countries. A claim for Children s Cover may not be paid if: any of the above apply, the claim was caused by alcohol or solvent abuse, or the taking of drugs except under the direction of a registered medical practitioner, the claim was caused by a condition which was present at birth or existed before your child became eligible or before the cover start date, the same eligible child has already had a claim paid, or four claims for Children s Critical Illness Cover have already been paid. Permitted countries The permitted countries are Andorra, Australia, Austria, Belgium, Bulgaria, Canada, Channel Islands, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hong Kong, Hungary, Iceland, Isle of Man, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, The Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Ireland, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States of America. 7

8 Questions and answers about Critical Illness Cover Types of cover What are the different types of cover and how do they work? When you take out Critical Illness Cover there are three different types of cover you can choose. The type of cover affects the amount you pay to us and that which is paid if a claim is made. Level cover the amount that is payable in the event of a claim stays the same for the length of your cover. With level cover, your payments also stay the same, unless you change your Critical Illness Cover or if your payment basis is Reviewable. This diagram illustrates level cover.* Amount of cover ( ) Term (years) Increasing cover the amount that is payable in the event of a claim increases annually on the cover start date in line with the change in the Retail Prices Index (RPI), subject to a minimum change of 0% and a maximum of 10%. Increasing your amount of Critical Illness Cover in this way can help compensate for the effect of inflation described in the Risks section on page 3. Your payment will increase by 1.4 multiplied by the % increase in the amount of Critical Illness Cover to pay for the increase. We will write to you in advance with details of your new amount of Critical Illness Cover and your new payment amount. You can ask us to stop increasing your amount of Critical Illness Cover on the anniversary of your Account start date, but if you later decide to increase them again we would need to collect new underwriting information from you. This diagram illustrates increasing cover for different levels of RPI.* Amount of cover ( ) Decreasing cover the amount that is payable in the event of a claim decreases annually on the cover start date. Decreasing cover is designed to match the amount of an outstanding loan or repayment mortgage over its term, using the fixed interest rate shown on your Quotation summary. If the interest rate on the loan or mortgage ever exceeds the rate shown on the Quotation summary, then the amount payable may not be sufficient to repay the loan or repayment mortgage in full. Your payments are calculated to take account of the reducing amount of cover but remain level so you pay the same throughout, unless you change your Critical Illness Cover. This diagram illustrates decreasing cover.* Amount of cover ( ) % RPI 2% RPI 4% RPI Term (years) Term (years) * These diagrams are for illustration purposes only and are based on an initial 100,000 of cover over a 25 year term. The type of cover your financial adviser has recommended for you is shown on your Quotation summary. 8

9 Payment and tax What are the payment bases for Critical Illness Cover? The payment bases available with Critical Illness Cover are Guaranteed and Reviewable. Guaranteed with Guaranteed payments, we won t apply any increases or decreases to your payments to us if the cost of providing your account turns out to be more or less than we first estimated, unless you make any changes or select increasing cover. Reviewable with Reviewable payments, we may offer you a more affordable payment when cover starts. We calculate your payments to us using assumptions that cover the whole period of cover. These assumptions are the future number of claims, their timing and the cost of reinsurance. We will increase or reduce your payment if our view of these assumptions at the time of review has changed since outset or the last review. Your payments to us are reviewed on the fifth anniversary after your cover start date and every fifth anniversary after that. If our costs to provide the cover are higher than first estimated your payment may go up and if they are lower your payment may go down. However, if the change is within 10% either way your existing payment and cover will stay the same until the next review date. Please note there is no limit to the amount by which your payment could increase or reduce. We will tell you before we change your payment. You can choose not to accept an increase in your payment by proportionally reducing your amount of cover instead. Payments to us may change during the length of cover even if you make no changes or do not select increasing cover. Payments after review could be higher than guaranteed payments would have been. Terms and conditions apply. If you are unsure whether guaranteed or reviewable are suitable for you, please speak to your financial adviser. You can find full details of your payment basis on your Quotation summary and in your Account pack. How does tax affect my Critical Illness Cover? Critical Illness Cover is normally paid free of income tax and capital gains tax. Current UK tax law and HM Revenue and Customs practice means you don t get tax relief on the amount you pay to us. Tax rules and rates can change and their impact depends on your individual circumstances. The information we provide is based on our interpretation of current HM Revenue and Customs practice. 9

10 Other information about Critical Illness Cover The information in this Key features document complies with the Association of British Insurers (ABI) statements of best practice for Critical Illness Cover of April You can request a copy of The ABI Guide to Critical Illness Cover which gives general information about critical illness cover from: The Association of British Insurers 51 Gresham Street London EC2V 7HQ United Kingdom

11 Please ask your financial adviser if you would like a copy of this document in large text, Braille or audio. PRKFCI 09/09/2011 (32919) Friends Life, PO Box 1810, Bristol BS99 5SN. Telephone: Friends Life Company Ltd, the provider of this plan, is authorised and regulated by the Financial Services Authority, register No ( A company limited by shares, registered in England No , registered office: Pixham End, Dorking, Surrey, RH4 1QA. As part of our commitment to quality service, telephone calls may be recorded.