what it terms a “revolutionary” product providing home mortgage
payments and living expenses protection.
Chris McFarlane, head of protection at LV=, explained that the
product is unique in that it provides mortgage protection for up to
25 years compared with 12 to 24 months in the case of most mortgage
payment protection products.
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In addition to mortgage protection, LV=’s product offers cover
against accident and sickness and, if required, unemployment.
Customers can also choose between level cover and cover linked to
the UK Retail Price Index (RPI). When index linked options are
chosen premiums are also linked to the RPI.
Providing an example of typical costs of cover, LV= used a male
aged 30 on his next birthday with a low-risk occupation. In this
example, the man opts for a level mortgage payment cover of £500
($990) per month payable for 25 years, and index linked living
accident, sickness and unemployment cover of £300 per month payable
for 35 years. The monthly premium in this example is £32.92 with a
three month waiting period for mortgage cover and £22.14 with a six
month waiting period for living expenses protection.
LV= guarantees that premiums are for the term of the plan and there
are no premium reviews or age banded increases, irrespective of how
many claims a policyholder makes. LV= stressed that the policy pays
out if the policyholder cannot do their own job rather, as in the
case of many other income policies, than if they cannot do any job
or any job to which they may be suited.
In addition, during periods when a policyholder is receiving
benefits an automatic waiver of premium applies.
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By GlobalDataEmphasising the need for mortgage protection McFarlane pointed to a
study by industry body, the Council of Mortgage Lenders
(CML).
According to the CML at the end of 2007 there were 11.82 million
mortgages outstanding in the UK and only 2.086 million mortgage
protection policies in force.
LV= is the trading name of the Liverpool Victoria Friendly Society
and was adopted last year.
