1. Affordable Income protection
Hi there. In this short presentation, we’re going to be looking at the ways we can help you to provide your clients with tailored solutions that include income protection cover.
The Royal London Personal Menu Plan lets you to tailor a client’s benefits to their specific needs…..within an agreed budget. You can apply for different types of cover, different sums assured, have different terms and even cover different people all within the same arrangement. This flexibility helps you to give holistic protection advice – making sure that your advice matches your clients’ circumstances as closely as possible and, in the process, helps you distinguish yourself from other sources of protection products your client might have considered.
But sometimes the full extent of this product flexibility may not be completely obvious and you may not be fully aware of the options available to help you ensure that all your client’s protection needs are met. This is particularly true when it comes to income protection.
Income protection

2. “It doesn’t pay out, does it?
Income Protection
WHY DON’T PEOPLE BUY IT?
“It’s too complicated”
“It doesn’t pay out, does it?
“It’ll never happen to me”
“I can’t afford it”
It’s no secret that in the protection sector we’ve generally been less successful in persuading people to buy income protection rather than life cover or critical illness. There are lots of reasons for this – product complexity, concern that it won’t pay out, a belief that the other benefits are more important or relevant – and, of course, the cost of the cover.
I’m going to consider the last of these – price – and look at ways you can provide income protection to people who might otherwise believe they’re priced out of the market. I’m going to demonstrate how to create solutions - using the options in the Royal London Personal Menu Plan – which can meet a client’s budget and provide comprehensive cover, too.

3. Income Protection on a budget
An example
Mark - 35 next birthday
Lucy - 31 next birthday
They’ve just started a family
Mark is main breadwinner on £40,000 a year
Their budget is £55 pm
You’re quoting other benefits costing £36.90 a month (including plan fee of £2.60)
Also need some income protection
I’ll use a simple case study to illustrate what I mean.
Mark and Lucy are a couple in their early 30s and have just started a family. Mark is the main breadwinner earning 40k a year and Lucy is going to be looking after their new baby. The reason they initially contacted you was to discuss protecting the mortgage now they have a new addition to the family, but after talking to you, they realise they need to do more than that. You’ve agreed with them that, at the moment, they can afford £55 a month for protection. You’ve already looked at life and critical illness cover for them and have come up with a benefit package costing £37 a month.
You now want to discuss the importance of income protection to cover their financial situation in the event of Mark being unable to work as a result of sickness, disability or accident. They have £18.10 of their budget remaining, so you need to find a solution that fits within that.
Let’s look at some of the options.

4. Cost? £72.96 a month Income protection How much could Mark have? Term
Max to age 70
Cost?
£72.96
a month
35 years
Amount
Max 55% of earnings
£1,833 a month
Level/increasing
RPI increases
Deferred period
4/8/13/26/52 weeks
4 weeks
Payment period
Full term/2 year/1 year
We’ll start by looking at the cost of the very best cover Mark could have from the Royal London Personal Menu Plan.
He’s 35 next, so that’s a maximum term for Mark of 35 years.
The maximum sum assured he can have is 55% of his earnings, so that’s £1,833 a month.
Clearly, his best option is to index the sum assured and we’ll assume he chooses to do so with increases linked to the RPI
We offer 5 different deferred periods – 4, 8, 13, 26 and 52 weeks – so we’ll choose the shortest – 4 weeks
And finally, at Royal London, we can offer traditional income protection with a full term payment period. That is, any claim is potentially payable until the end of the term of the plan if the person continues to meet our definition of incapacity during that time. Or we can offer limited payment periods of either 1 year or 2 years. I’ll explain those in more detail shortly, but for now we’ll look at full term cover.
So those are the best benefits Mark could have from Royal London, but, of course, they’ll come at a price. For that package, Mark would need to find over £70 a month to pay for his income protection, which is clearly well beyond his budget.
So obviously, we need to tailor these benefits to make them affordable for Mark and Lucy.
Full term
Source: Royal London Personal Menu Plan, May Client aged 35 next birthday, non-smoker. Cost excludes plan charge. Quoted on own occupation basis.

5. Cost? £21.81 a month Income protection How much could Mark have? Term
Max to age 70
Cost?
£21.81
a month
35 years
Amount
Max 55% of earnings
£1,000 a month
£1,833 a month
Level/increasing
RPI increases
Deferred period
4/8/13/26/52 weeks
26 weeks
4 weeks
Payment period
Full term/2 year/1 year
Nothing I’m about to show you here is prescriptive in any way, but let’s look at some of the changes we could make to bring the cost of the cover within their budget.
So, I’m going to reduce Mark’s monthly benefit from 55% of his earnings, to 30%. That’s £1,000 a month.
And I’ll change the deferred period to one that is probably more reasonable for Mark anyway, 26 weeks.
So that’s two fairly significant changes, which bring the cost of the benefit down to £21.81.
Unfortuantely, that’s still too much for their budget, so we need to look at some other options, too.
Full term
Source: Royal London Personal Menu Plan, May Client aged 35 next birthday, non-smoker. Cost excludes plan charge. Quoted on own occupation basis.

6. How much could Mark have?
Income protection
How much could Mark have?
Term
Max to age 70
25 years
35 years
Amount
Max 55% of earnings
£1,000 a month
£1,833 a month
Level/increasing
RPI increases
Deferred period
4/8/13/26/52 weeks
26 weeks
4 weeks
Payment period
Full term/2 year/1 year
So, another change I can make is to reduce the term of the cover from 35 to 25 years, meaning Mark is now covered until age 60.
I’m also going to change the cover payment period from full term to 2 years.
2 year
Full term
Source: Royal London Personal Menu Plan, May Client aged 35 next birthday, non-smoker. Cost excludes plan charge. Quoted on own occupation basis.

7. Income Protection COVEr PAYMENT PERIOD
We’ll pay a claim for up to one year or two years
If the person recovers and returns to work for 52 weeks, they’ll be eligible to claim again on their cover
Multiple claims are possible with term of contract
At Royal London, we offer a choice of two limited payment periods – 1 year or 2 years. In the event of a claim, payment is limited to a maximum of the chosen payment period, so, in Mark’s case, 2 years. After that, his benefit would stop.
However, if he recovers and returns to work for 52 weeks, he would become eligible to claim again should he need to.
So let’s see what effect these changes would have on Mark and Lucy’s premium.

8. Cost? £6.31 a month Income protection How much could Mark have? Term
Max to age 70
Cost?
£6.31
a month
25 years
35 years
Amount
Max 55% of earnings
£1,000 a month
£1,833 a month
Level/increasing
RPI increases
Deferred period
4/8/13/26/52 weeks
26 weeks
4 weeks
Payment period
Full term/2 year/1 year
That’s brought the cost down dramatically - well within Mark and Lucy’s budget. In fact, there’s now enough room in their budget that we can revisit the quote to make some improvements to the cover.
2 year
Full term
Source: Royal London Personal Menu Plan, May Client aged 35 next birthday, non-smoker. Cost excludes plan charge. Quoted on own occupation basis.

9. Cost? £17.08 a month Income protection How much could Mark have? Term
Max to age 70
Cost?
£17.08
a month
35 years
25 years
Amount
Max 55% of earnings
£1,350 a month
£1,000 a month
Level/increasing
RPI increases
Deferred period
4/8/13/26/52 weeks
26 weeks
4 weeks
Payment period
Full term/2 year/1 year
So, I’m going to increase the amount of Mark’s cover from £1,000 a month to £1,350 a month – that’s just over 40% of his earnings.
And now I’ve done the research, I realise that Mark can have full term cover, rather than a limited payment period, so I’ll make that change, too.
The final cost is now £ a month. Let’s look to see where we are now.
2 year
Full term
Source: Royal London Personal Menu Plan, May Client aged 35 next birthday, non-smoker. Cost excludes plan charge. Quoted on own occupation basis.

10. Plus Other benefits £36.90 Total £54.87 per month £17.97 per month
Income protection
THE FINAL COST
Income protection
£17.08 per month
Waiver of premium
Total
£0.89 per month
Total £54.87 per month
Plus
£17.97 per month
Other benefits £36.90
25 years
25 years
£1,350 a month
£17.97 per month
RPI increases
26 weeks
4 weeks
So the final income protection cover we’re providing for Mark is for a 25 year term, £1,350 a month increasing annually by the retail prices index. His deferred period is 26 weeks and we’re giving him full term cover, for a cost of £17.97 a month.
At Royal London, when you have income protection with us, we require that you have waiver of premium, too. This will apply to all benefits in the plan, including the life and critical illness cover you have already looked at.
I’m going to add it to Mark’s plan. The term must be the same as for income protection, but I don’t have to use the same deferred period. Mark tells you he would want Royal London to waive the plan premium soon as possible if he’s incapacitated and can’t work, so we’ll choose a 4 week deferred period for his waiver of premium.
This adds £0.89 a month for a total cost of £17.97 a month for income protection and waiver
As I said earlier, you’d already quoted for life and critical illness cover costing £36.90, so adding income protection and waiver to those brings the total cost to £54.87 – just within Mark and Lucy’s budget.
Full term
Source: Royal London Personal Menu Plan, May Client aged 35 next birthday, non-smoker. Cost excludes plan charge. Quoted on own occupation basis.

11. Better to have some cover than none at all
PRODUCT OPTIONS
FOR TAILORED SOLUTIONS
Explore the options
Better to have some cover than none at all
Helps you to treat your customer fairly
So I hope this demonstrates the flexibility of our menu approach and the many ways you have to tailor income protection by looking at the various options we offer.
Clearly, many people are not in a position to buy all the cover they need, but by exploring the options with them, you’re able to show them how it’s better to have some cover in place than none at all. And, of course, it gives you the peace of mind that you’re treting the customer fairly by giving genuinely holistic protection advice.

12. adviser.royallondon.com/protection
You can find out more about the Royal London Personal Menu plan by visiting our adviser site at the address on the screen. There you’ll find all the details you need along with a wide range of sales tools and ideas designed to help you explain protection to your clients.
Thanks for listening.
The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number It provides life assurance and pensions and is a member of the Association of British Insurers. Registered in England and Wales number Registered office: 55 Gracechurch Street, London EC3V 0RL. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies. The firm is on the Financial Services Register, registration number Registered in England and Wales number Registered office: 55 Gracechurch Street, London, EC3V 0RL. 12
PR P8 PN 0069 | May 2017