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Business Protection Life & Critical Illness Cover Product Profile

Read below a summary of the relevant product information about Business Protection Combined Life and Critical Illness Cover, in accordance with the Insurance Distribution Directive. Designed to help you make an informed decision and comparison for your client, we set out the product’s target market, distribution strategy, suitability, main features, risks, options and costs.

This information is also available in downloadable pdf format.

Waiver of Premium can be added as a separate policy. Read about our Waiver of Premium product profile.

This is only a summary of the product features. For more information please read the Key Features document and the Policy Conditions.

Business Protection Combined Life and Critical Illness Cover is aimed at small and medium-sized businesses (SMEs) to help safeguard their financial future by providing a one-off cash payment in the event that the business owner or key person dies or is diagnosed with a critical illness.

Business protection targets three key elements - ownership, profit and debt. It’s important to understand the setup of the client’s business, who the owners are and the risks they face to help identify and justify the need for business protection and the basis for the policy. The different types of business protection are Key Person Cover, Share and Partnership Protection

A key person could be the business owner, director, sales person or any employee with specialist skills or expertise. Losing a key person can be disastrous for the long-term survival of a business and the proceeds from a policy can give the business a cash injection, either used to protect profits or clear debt to help trading continue.

The client can choose whether the policy is written on an own life or life of another basis, with the exception for Limited Liability Partnerships or Limited Companies. For these types of business structures, they should be set up on a life of another basis, with the company taking out a policy and insuring their shareholder/partner or key person.

Key Person Cover would not be used to protect ownership of the business and if a business wants to protect profit and debt, two separate policies would need to be set up to cover each element.

The setup of the policy depends on who is being insured, and the business type as explained below:

Business Type

Policy written of life of Employee

Policy written on life of business owner

Own life or Life of another

In Trust Y/N

Own life or Life of another

In Trust Y/N

Sole Trader

Life of another

No – sole trader is policy owner

Own Life

Yes – for family of business owner

Partnership

Life of another

Yes – in trust for partners

Own Life

Yes – in trust for partners

Limited Company, or Limited Liability Partnership (LLP)

Life of another

No – Limited Company or LLP is the policy owner

Life of another

No - Limited Company or LLP is the policy owner

The policy provides the owners of a business with a lump sum to buy the affected individual’s share of the business in the event of them dying or being diagnosed with a critical illness, helping the surviving owners retain full control and ensure the deceased family’s estate receives fair settlement. The business owners can choose whether the policy is written on an own life or life of another basis however life of another is usually only suitable where there are just two owners, and doesn’t provide any flexibility for future business changes.

Regardless of whether the policy is written on an own life or life of another basis a suitable double or cross option arrangement needs to be in place which facilitates the sale of the deceased’s share to the surviving owners. As critical illness cover is included a suitable single option agreement should also be in place to allow a shareholder to sell their share to their fellow shareholders if they’re diagnosed with a critical illness.

To ensure your clients receive the right level of protection and to help ensure the policy is set up to meet the business’s needs, we believe this product should be sold on an advised basis, face to face or over the phone.

It’s important to regularly review your client’s circumstances and protection needs to make sure their cover is appropriate.

  • Pays a cash lump sum on death, or diagnosis of a specified critical illness, during the term
  • Covers 64 conditions including 44 full payment, and 20 additional payment conditions
  • Enhanced claim benefits for 16 full payment conditions
  • Children’s critical illness cover automatically included (for 62 of the 64 conditions), at no added cost
  • Level, increasing or decreasing cover
  • Guaranteed or reviewable premiums
  • Option to include Total Permanent Disability as a critical illness
  • Your client is only covered for the conditions and definitions listed in the policy conditions and no others
  • This product also provides cover for less severe conditions, these are called additional payments. If a claim is paid for an additional payment, the client’s full amount of cover remains in place. We’ll only pay one claim for each additional payment condition covered under the policy.
  • When a claim is paid for a full payment condition or if your client were to die, the policy would normally end (unless the customer has excess life cover over and above the amount of critical illness cover)
  • We won't pay a claim if your client dies as a result of intentionally taking their own life in the first 12 months of the policy
  • This policy is not suitable for clients who want to protect their income should they be unable to work due to accident and sickness
  • There is no cash in value at any time
  • To make a claim, the person insured must survive for at least 14 days after being diagnosed (this doesn't apply to claims for children's cover)
  • If your client stops paying their premiums, their cover may cease
  • Reviewable premiums may increase or decrease during the term of the policy. However, the premium is guaranteed not to change for at least the first 5 years of the policy.
  • If your clients choose level cover, it won't keep up with inflation and could buy less in the future
  • The minimum term is 5 years and maximum term 40 years. The policy must end before the any person insured reaches the age of 70.
  • Clients can choose to take out a policy on an own life (written into trust) or life of another basis for either someone crucial to the firm’s profits, or one or more business owners. If your client is insuring someone else, they must meet these requirements.
  • For policies written under trust, it will depend on the structure of the business as to how the trust is set up.

To apply, the client must be:

  • Permanently living in the UK
  • Aged between 17 and 64 (for level and decreasing cover)
  • Aged between 17 and 59 (for inflation-linked cover)
  • Those looking for personal protection
  • Those wanting to provide a death in service benefits for employees
  • Those looking to cover a regular benefit if the person insured is unable to work for a period of time due to accident or sickness

Children’s Critical Illness Cover: is automatically included at no added cost for your client’s children for all of the listed critical illnesses (with the exception of Total Permanent Disability and Diabetes mellitus Type 1) from birth until age 21. Children’s cover only pays out on diagnosis of a critical illness; there is no survival period required for children and will not pay out if the child dies.

Additional Payments: This product also provides cover for 20 less severe conditions. These are included at no added cost, and conditions and limits apply. If a claim is paid for an additional payment, your client's full amount of cover remains in place. For more details, refer to the Policy Terms and Conditions.

Enhanced Payments: We will pay an enhanced claim amount on diagnosis of six specified neurological conditions, if your client is under 45 years old, and on ten full payment conditions if the claim is as a direct result of an accident. These are included at no added cost, and conditions and limits apply. For more details, refer to the Policy Terms and Conditions.

Total Permanent Disability: can be included, at an additional cost at outset as a critical illness condition. There are two types of cover; own occupation or work tasks, and the type we offer will depend on your client's occupation. Own occupation will cover your client if as a result of sickness or accident they are left unable to do the main aspects of their normal occupation and are never expected to be able to do so again. Work tasks will cover your client if as a result of sickness or accident they are left unable to carry out 3 of 6 specified work related tasks and are never expected to be able to do so again. For more details, refer to the Policy Terms and Conditions.

Guaranteed Increase Options: Your client can increase the amount of the cover for their employee, if certain events happen and they are eligible. If your client changes the amount of their cover using one of these options, their premium will also change to reflect this. The premium will be based on the age and smoker status of the employee at the time of change. For more details, refer to the Policy Terms and Conditions.

Member benefits: With this policy the insured person automatically becomes a member and is entitled to a range of benefits, at no added cost. These include voting rights, free advice helplines and discounts on selected LV= products. These benefits are non-contractual and can be changed or removed at any time, and conditions apply. More details about LV= membership and member benefits are available at LV.com/members.

LV= Business Care: For all new policies (from 1 October 2015), we offer the policyholder (the business) telephone access to free specialist advice in business and commercial law, business tax and VAT. Provided at no added cost, these services are non-contractual and can be changed or removed at any time, and conditions apply. More details about LV= Business Care are available at LV.com.

LV= Doctor Services: For all new policies (from 1 September 2018), the person insured under the policy has access to a number of medical services and advice which can be accessed via one simple app or phone call, at no added cost. These include Remote GP, Second Opinion, Prescription Services, Remote Physiotherapy, Remote Psychological Services and discounted health MOTs. These benefits are non-contractual and can be changed or removed at any time, and conditions apply. For more details visit LV.com.

The policy premium also includes a fee, which is a fixed monthly amount, to cover administration and support costs.

LV= Doctor Services, LV= Business Care and Rehab Support Services are provided by third party companies. These services are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.


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LV=, County Gates, Bournemouth, BH1 2NF, UK