Keyperson and Shareholder Protection Business Momentum Adviser Guide
Contents Page No. 1 Introduction 2 2 Choosing the right cover 2 3 Detailed Product Information 3 Life and Life and Permanent Total Disability Critical Illness and Life General 4 Medical Underwriting 7 5 Financial Underwriting 9 6 Immediate Cover 10 7 Pension Term notes 10 1 Liverpool Victoria s Business Momentum
An Introduction to Business Momentum Once you have convinced your business clients of the need for Business Protection, you then need to choose the right provider to protect your clients. This guide is designed to give you all the information you need when you recommend Liverpool Victoria. We have set out to ensure that when you recommend us our underwriting will enhance your credibility with your key contacts. 1. Introduction With a product from the Business Momentum range, specifically designed for the Keyperson and Share Protection markets, and supported by highly competitive rates, you can feel comfortable that Liverpool Victoria is the right choice for your clients. The speed of underwriting is a vital consideration in the business market busy partners, directors and executives cannot afford to waste precious time so our high underwriting limits ensure that when you recommend us this aspect will enhance your credibility with your key contacts. You also have the reassurance of our commitment to delivering service excellence, with specially enhanced processing times for this market, backed up by technical support which will help simplify what can sometimes seem complex subjects. IFA/Client Relationship We will not cross-sell to your clients. You can be confident that our data will not be used for any cross-selling purposes. Other than any ongoing information we have to give such as for index-linked updates and options, you will find that we do not approach your clients directly as we feel that the client/adviser relationship should be respected. 2. Choosing the right cover We offer a comprehensive range of products to meet the needs of your business clients. Level Term Assurance much Share Protection and Keyperson loss of profits cover is written on this basis, where only life cover is required. Level Term Assurance and Permanent Total Disability (PTD) cover combined protection against death or serious accident or illness, providing one payment in the situation where a Keyperson or Shareholder will never be contributing to the business again. Commercial Mortgage Protection ideal for the protection of business loans where repayments combining capital and interest are made. Pension Level Term can be appropriate in Share Protection cases where an automatic accrual agreement exists, and the protection solution is for the shareholder to effect an own life policy, equal to the value of their notional share, in trust for their family. The availability of tax relief on premiums obviously makes this a very attractive option. Critical Illness comprehensive critical illness cover, also available as Critical Illness Mortgage and whole of life with Critical Illness LIFETIME. Liverpool Victoria s Business Momentum 2
Choosing the right cover We offer a comprehensive range of products to meet the needs of your business clients: Level Term Assurance, Level Term Assurance and PTD, Commercial Mortgage Protection, Pension Level Term, Critical Illness, Critical Illness LIFETIME, Critical Life LIFETIME, Critical Life, Critical Illness Mortgage, Critical Mortgage all with Waiver of Premium Option the choice is yours... Critical Life Life cover plus accelerated critical illness cover offering more comprehensive protection to include illnesses and accidents which may allow a return to work at some stage in the future, as well as life and PTD cover. Also available as whole of life with Critical Life LIFETIME. Critical Mortgage for businesses that can afford the fuller protection for commercial loans that the combination of life and critical illness cover provides. Waiver of Premium Option on all the above products (except life protection under a personal pension), we offer a waiver of premium option to help businesses and shareholders maintain cover when disability through sickness or accident strikes. Buyback option on Critical Life and Critical Life LIFETIME Different sums assured for critical illness and life protection available 3. Detailed Product Information 3.1 Level Term Assurance, Level Term Assurance and Permanent Total Disability Level Term Assurance The sum assured is payable on death within the chosen term or before a specific terminating age. We will cover terms between 1 and 45 years. Level Term Assurance and Permanent Total Disability This provides one lump sum, payable either on death or on diagnosis of the permanent and total inability of the life assured to carry out the duties of his or her normal occupation because of sickness or accident. The minimum term is 1 year. Commercial Mortgage Protection The policy is designed to cover the outstanding balance of a loan obtained for business purposes as well as to provide the significant benefit of a guaranteed minimum sum payable on death whether or not there is a mortgage in force. The sum assured will be sufficient to repay the balance of the loan for interest rates up to 12% but does not cover any arrears in repayment. The minimum term is 4 years. Pension Level Term We have Inland Revenue approval to issue life protection policies under the terms of the Income and Corporation Taxes Act, 1988. Stakeholder pension schemes are a new type of low-cost personal pension scheme, which may accept contributions from 6 April 2001. Chapter IV Part XIV ICTA 1988 has been amended to give effect to the changes. We offer the level term version within Business Momentum. The minimum term is 1 year. More detailed technical information is included in Section 7. 3 Liverpool Victoria s Business Momentum
All our life protection premiums are guaranteed throughout the term. Premium Rates All our life protection premiums are guaranteed throughout the term. Minimum Premiums There is a minimum premium of 7 per month. 3.2 Critical Illness Critical Illness and Critical Illness LIFETIME These critical illness plans provide full cover against any of the specified critical illnesses. Critical Illness will provide cover for a specified term, Critical Illness LIFETIME is a whole of life product with no termination date. Critical Life and Critical Life LIFETIME An accelerated life policy providing payment on either death or diagnosis of a critical illness. Cover can be index-linked against inflation, and if selected, adjustments will be made each year to both the sum assured and premium in line with the Retail Price Index regardless of state of health. Critical Life LIFETIME provides cover during the lifetime of the life assured. Critical Illness Mortgage A critical illness policy designed to cover the outstanding balance of a loan obtained for business purposes. Payment will be on diagnosis of one of the listed critical illnesses. The sum assured can be used to pay some or all of the outstanding balance of the loan, subject to a maximum mortgage interest rate of 12%, but does not cover any arrears in repayment. The guaranteed minimum sum is payable on diagnosis of a critical illness whether or not there is a mortgage in force. Critical Mortgage An accelerated life policy designed to cover the outstanding balance of a loan obtained for business purposes. Payment on death or diagnosis of a critical illness. The sum assured can be used to pay some or all of the outstanding balance of the loan, subject to a maximum mortgage interest rate of 12%, but does not cover any arrears in repayment. The guaranteed minimum sum is payable on either critical illness or death whether or not there is a mortgage in force. Conditions Covered All of the products cover a comprehensive list of conditions. A full explanation of policy conditions and plain English definitions is available on request. The seven highlighted core illnesses comply with the ABI approved definitions. Alzheimer s disease (including senile and pre-senile dementia) Angioplasty Aorta graft surgery Aplastic anaemia Bacterial meningitis Benign brain tumour Blindness Cancer Coma Coronary artery bypass surgery Creutzfeldt-Jakob disease Deafness Heart attack Heart valve replacement or repair HIV assault HIV blood transfusion HIV occupation Kidney failure Loss of independent existence Loss of limbs Loss of speech Major organ transplant Motor neurone disease Multiple sclerosis Paralysis/paraplegia Parkinson's disease Permanent total disability before age 65 Rheumatoid arthritis Stroke Terminal illness Third degree burns Liverpool Victoria s Business Momentum 4
Business Momentum in Detail Only one exclusion and premiums guaranteed for 10 years Buyback option For Critical Life and Critical Life LIFETIME single life policies, your client may choose at outset to include a buyback option. If we have paid a claim for critical illness benefit, they will have the opportunity to take out a new policy for life cover only, without further evidence of health, based on premium rates at that time, provided that: the sum assured is no greater than the amount of the original critical illness benefit or life cover,whichever is the lower, the commencement date of the new policy is twelve months after the critical illness claim, for Critical Life the termination date of the new policy is the same as the termination date of the original policy. Example: Buyback at work 100,000 sum assured payable on death or earlier critical illness diagnosis. After 5 years 100,000 is paid out under the critical illness cover after the life assured suffers a heart attack. One year later the life cover of 100,000 can be fully reinstated, at a time when the life assured would probably be uninsurable otherwise. Critical illness benefit and life cover 100,000 Amount paid out on CI claim 100,000 Life cover remaining Nil After 12 months, buyback life cover 100,000 Different sums assured for critical illness and life cover For Critical Life, Critical Mortgage and Critical Life LIFETIME, your client may choose to have different levels of cover for the two elements of their policy, critical illness and life cover, with critical illness higher or lower than the life cover. If a claim is accepted, the relevant level of benefit for that type of claim will be paid out. Following a critical illness claim, if the life cover is higher than the critical illness cover, the excess life cover will continue. Example: Different sums assured at work When covering a mortgage of 80,000, full life cover might be chosen, but a client may decide that he can only afford 40,000 critical illness cover. In this case the sums assured will remain in the same proportion as at outset throughout the term of the policy. Different sums assured combined with buyback A client may choose different levels of critical illness and life cover for business protection, but still require the facility to reinstate life cover after a critical illness claim. The table below shows how this works. Critical illness benefit 200,000 Life cover 300,000 Amount payable on CI claim 200,000 Remaining life cover 100,000 Buyback life cover after 12 months amount of CI claim 200,000 Total life cover 300,000 5 Liverpool Victoria s Business Momentum
Only one exclusion Other than an exclusion of suicide within the first year there are no exclusions, which you and your clients will find a refreshing approach compared to insurers who exclude claims linked to alcohol, drugs, sports, pregnancy, war, riot or revolution. Waiting Period There is no waiting period between effecting a policy and claiming. Worldwide Cover The cover is worldwide subject to evidence of any critical illness or PTD claim being provided by a medical attendant in the UK, North America, Australasia and most countries in Europe. We also retain the right to arrange an examination in one of these areas. Minimum term The minimum term is 5 years. Premium Rates Premiums for Critical Illness Mortgage and Critical Mortgage are guaranteed throughout your policy. Otherwise we give a ten year premium guarantee, so no review will be made for at least 10 years. Minimum Premiums There is a 10 per month minimum. 3.3 General Waiver of Premium Option (Not available for life protection under a personal pension). Where this option is chosen it means that if your client has been unable to perform the essential duties of their normal occupation for longer than 26 weeks due to sickness or an accident, premiums will no longer be payable while the incapacity lasts. A small extra charge will be made for this facility. Within Business Momentum Maximum term The maximum terminating age is 65 for Critical Illness, Critical Life, Critical Illness Mortgage and Critical Mortgage. Lives covered The products are only available on a single life basis, whether life of another or own life. Assignment and Trusts All policies issued by us are assignable. Policies under trust Standard trust wordings for share protection for private limited companies and partnerships are available on request. We are unable to offer legal advice. Liverpool Victoria s Business Momentum 6
Flexible underwriting Where we do need medical evidence, we aim to obtain this quickly and efficiently, but provide full temporary cover while it is being obtained in as many situations as possible. 4. Medical Underwriting Our objective is to minimise the number of cases where Keypersons and Shareholders are required to provide medical evidence. We achieve this by ensuring our underwriting limits are amongst the highest in the market. Where we do need medical evidence, we aim to obtain this quickly and efficiently, but provide full temporary cover while it is being obtained in as many situations as possible. We offer excellent service standards for requesting and chasing medical evidence, and we use nurses and doctors who can carry out the necessary appointments in the shortest possible timescales. 4.1 Level Term Assurance and Level Term Assurance and PTD Limits Life Medical requirements for sums assured up to 1,000,000 Paramedical General Medical Age Screening Practitioner s Report Examination Up to 40 400,001 500,001 750,001 41 45 300,001 400,001 600,001 46 50 250,001 350,001 500,001 51 55 200,001 300,001 400,001 56 60 150,001 200,001 300,001 61 65 100,001 150,001 250,001 We require a Lifestyle Questionnaire and HIV Test for applicants up to age 60 as follows: Questionnaire: SM 100,001 AM 350,001 HIV Test: SM 300,001 AM 1,000,001 F 1,000,001 SM Any male who is single, separated or divorced AM All Married Males including widowers F Female HIV Test. To calculate the total sum at risk for HIV test purposes include: 1) All life insurance effected in the preceding 12 months with us 2) All life insurance effected in the preceding 12 months with any other insurer if the applicant is a single male and the application under consideration exceeds 150,000 or 250,000 for other males/females Additional Medical Requirements for sums assured in excess of 1m Sum assured To age 40 41-45 Over 55 1,100,001 *see note below *see note below Exercise ECG** 2,500,000 inc 2,500,001 *see note below Exercise ECG** 5,000,000 inc Fasting blood profile Chest X-ray for smokers only Over 5,000,000 MER Recognised examiner of consultant status Exercise ECG** Fasting blood profile Microscopic urinalysis Chest X-ray for smokers only *Note Where there is a combination of risk factors (family history of coronary heart disease, smoking, hypertension, high cholesterol or overweight) there might be a need to obtain exercise ECG and/or Fasting blood profile. Refer to underwriters. ** Exercise ECG includes a resting ECG. 7 Liverpool Victoria s Business Momentum
4.2 Critical Illness Limits Critical Illness - Medical requirements for sums assured up to 1,500,000 AGE GPR PSR HIV MER ECG PROF XCG MSU PFTs Up to 40 300,001 400,001 SM 300,001 750,001 1,500,001 M/F 500,001 41 45 250,001 350,001 as above 500,001 1,000,001 46 50 125,001 300,001 as above 500,001 1,000,001 51 55 75,001 150,001 as above 350,001* 750,001 56 60 50,001 100,001 as above 350,001* 750,001 Over 60 50,001 75,001 N/A 300,001* 500,001 Key: LSQSM Lifestyle Questionnaire single males (inc separated and divorced) LSQAM Lifestyle Questionnaire all married males (inc widowers) NOTE These requirements apply in conjunction with our Fast-Track application forms launched June 2000 HIV SM HIV Test single males (inc separated and divorced) HIV M/F HIV Test all married males, widowers and females GPR General Practitioner s Report PSR Paramedical Screening Report MER Medical Examination Report ECG Resting ECG XCG Exercise ECG (includes a resting ECG) PROF Blood Profile (biochemistry and haematology). *PROF to also include a PSA for males. PSA = Prostate Specific Antigen MSU Microscopic Urinalysis PFTs Pulmonary Function Tests (inc peak flow, FEV1 and FVC). FEV1 = Forced Expiratory Volume in 1 second. FVC = Forced Vital Capacity. Different sums assured may be effected for critical illness cover and life cover. The medical evidence requirements will normally be based on the critical illness sum assured but, where the life sum assured is considerably higher, additional medical evidence may be required. 4.3 Medical Examination or Paramedical Screening Medical examinations will be arranged with doctors from our panel. Applicants are asked to state the most convenient location. Paramedical screening is undertaken by nurses who will visit the applicant at home or at work. The nurse will telephone the applicant to make an appointment. Applicants are asked to give their telephone number which will not be used for any other purpose. We will write directly to the applicant to warn that a nurse will call and to ensure that there is no delay. A copy will be sent to you and we will not otherwise communicate directly with your client. Liverpool Victoria s Business Momentum 8
Financial underwriting 5. Financial Underwriting Business cover Keyperson cover Partnership arrangements Share purchase arrangements Business loan collateral 5.1 Level Term Assurance and Level Term Assurance and PTD Total sums assured proposed and in force Up to 500,000 Financial Underwriting None provided the reason for the policy, class of policy and sum assured are compatible. Sum Assured 500,001 1,000,000* Financial Underwriting Business cover financial questionnaire. Where a trading loss has been recorded in any of the last 3 years, Reports and Accounts will be required. Sum Assured 1,000,001 and over* Financial Underwriting Questionnaire plus 3 years Reports and Accounts and other supporting documentation (see below). 5.2 Critical Illness - Financial Underwriting In all cases we will consider whether the total amount of cover is relative to the circumstances of the business. Sums assured of 300,000 or less can normally be covered without further evidence. The following is a guide to higher levels of cover. Sum Assured Up to 300,000 Financial Underwriting Test of reasonableness based on purpose of cover. Sum Assured 300,001 500,000 Financial Underwriting Business cover financial questionnaire. Sum Assured Over 500,000 Financial Underwriting i) Questionnaire countersigned by an independent professional third party. ii) Copies of last 2 years Report and Accounts. iii) Copy of the share purchase or partnership agreement, if share protection. iv) Copy of the loan agreement if the cover is for a business loan. *For business loan collateral, a loan offer/agreement will be required for sums assured of 750,000 or more plus a business plan/loan presentation for sums assured of more than 1,000,000. For Keyperson cover or Keyperson loan, a service agreement and curriculum vitae will be required. For share purchase/partnership cover a share purchase or partnership agreement plus company valuation report will be required. 9 Liverpool Victoria s Business Momentum
Full temporary cover can be granted at no charge for a maximum 30 days from receipt of application 6. Immediate Cover Full temporary cover can be granted at no charge for a maximum 30 days from receipt of application until we receive medical evidence generated solely by the sum assured (and a cover note can be issued on request), up to the lowest of the sum assured, 1 million life assurance, 500,000 Permanent Total Disability (PTD) benefit or 300,000 critical illness benefit, provided certain conditions are met. See our detailed cover note guidelines for full information. 7. Pension Term Notes The insured may pay premiums of up to 10% of total personal pension or stakeholder plan contributions. This percentage limit includes any existing personal pension plan life cover premiums. The Company does not issue policies providing retirement benefits. Tax relief on contributions Contributions are made net of basic rate tax. Higher rate tax payers can obtain the balance of relief due from the Inland Revenue. Contributions paid by an employer on behalf of an employee will be paid gross and treated as a business expense for tax relief purposes. Lump sum death benefits All lump sum death benefits are paid by the Company, as Scheme Administrator, in accordance with the scheme rules. Assignments, nominations and trusts All policies issued by us are assignable. A nomination form is incorporated in the application to enable the insured to nominate possible beneficiaries to be paid at the Scheme Administrator s discretion. We can supply standard trust wordings on request. However, the Company is unable to offer legal advice. Taxation of benefits Under normal circumstances lump sum death benefits will be paid free of income tax, capital gains tax and inheritance tax. This literature is based on our understanding of the current tax and Inland Revenue practice, but the law relating to taxation is always liable to change and it is not possible for us to foresee such changes. Liverpool Victoria s Business Momentum 10
Liverpool Victoria Life Company Limited (LVLC) Pynes Hill House, Rydon Lane Exeter, EX2 5SP. LVLC is a wholly owned subsidiary of Liverpool Victoria Friendly Society Limited. Registered Office: County Gates, Bournemouth, BH1 2NF. Registered no 597740, England. Customer Service Centre Telephone 01392 445 555. Calls may be monitored or recorded for training purposes. P1770/30353 0203