The Co-op Group has returned to the life insurance market, launching Co-op Life Cover alongside its partner Royal London.
It says the new venture will offer a solution designed by its members, not widely offered in the market, to policyholders who may at times have periods of financial difficulty.
The move marks another step by the mutual to re-enter markets it was forced to abandon as part of the rescue plan from its financial crisis. Last year – having sold its bricks-and-mortar pharmacies in 2014 – it made a move back into healthcare with the purchase of the Dimec prescriptions app – which allows the Group to expand without investing in physical outlets.
Last month the Group announced the sale of its general insurance underwriting business to Markerstudy for £185m, but said it will continue to develop its own branded products in that market and already has branded travel insurance cover.
These moves are all part of the Group’s plan to grow revenues and member value in the next 4 years across its core markets in Food Retail, Funeralcare & Life Planning, Insurance & Healthcare.
Pippa Wicks, deputy CEO at the Group, said: “Life insurance is not new territory for us, we have a rich history in this area, and we can see a clear need to come back into this sector and provide a distinctive co-op solution for our members.
“We are focused on meeting our member’s needs and this launch follows our acquisition of Dimec, a healthcare technology start-up, which has allowed us to return to the health sector in a way far more agile and innovative way.”
The new life insurance product offers a level term, decreasing term or family income benefit and:
- Includes the option to take two six month payment holidays throughout the lifetime of the policy after a 12 month qualifying period, allowing their policy to remain in force
- Customers can also opt to reduce their cover level rather than pay back any shortfall at the end of the payment holiday window.
Charles Offord, director of Co-op Insurance, said: “There is a clear life insurance gap in the UK, especially for those who are foregoing payments or not taking out cover to support relatives with their day to day finances.
“It just isn’t right that billions of pounds in premiums are being paid by customers on time, every month, for their policies to be cancelled when finances are stretched. At the Co-op we are keen to fill this gap and appreciate that sometimes finances can be stretched and people have to prioritise what gets paid, and what doesn’t.
“All too often, life insurance is seen as the least important payment, when really nothing could be further from the truth if something bad happens. This is why we have created up to six month payment holidays, alongside our partner Royal London, to help policyholders out in their time of need. We’ll also allow customers to reduce their insured amount rather than pay back any shortfalls to further lessen the financial pressure.”
Jerry Toher, CEO of Royal London’s Consumer Division, said: “We all face money problems from time to time and as a mutual insurer, we want to help consumers when they go through these hard times. Royal London, along with our partner Co-oOp Insurance, is proud to be one of the few providers offering a product that allows the financial flexibility of a payment holiday. Customers can take a break from paying their monthly premiums and keep their life insurance cover at a time when they are financially vulnerable, instead of losing cover altogether.”
Co-op Life Cover came about after life insurance emerged as an area that the Group’s members found complex, confusing and in need of a co-op alternative.
The offering was shaped through several stages of consultation. Members were asked what they were looking for in a life insurance product, from which the Co-op prioritised a list of features and benefits. “We were able to understand how members viewed incentives, product features and aspects of the buying process,” said head of products Mark Woffenden.
“We also invited members to suggest other things they would value – things that we’d perhaps missed, or not included in the ideas we presented to them. We heard a repeated call to ensure that clarity and transparency characterised the new product and how it was communicated, and this became central to our approach.”
As a result, the Co-op’s new life cover is easy to access with only eight simple questions to answer in order to apply. And the policy wording has been given the ‘Fairer Finance’ clear and simple mark.
Co-op Insurance Services is now planning to launch more life insurance products.
“I can’t stress just how invaluable our members have been in the development of this new life product and the development of the other life products we have in the pipeline,” said Mr Woffenden. “They’ve provided us with some fantastic guidelines, have challenged many of our assumptions and shown to us that we don’t always have the answers. We’ve tried to give our members something that addresses their needs, and I hope we’ve achieved that.”
- Level – pays out a fixed lump sum. This cover has been designed to provide a lump sum for dependents
- Decreasing – Pays out a single amount that reduces over time. This cover has been designed to help cover a repayment mortgage based on a fixed interest rate of 7%
- Income benefit – a monthly income of up to £2,500 paid between claim and the end of the term
Co-op Life cover will also include an optional serious illness cover. This benefit pays out a set amount of money to the customer on diagnosis of a one of the following six serious illnesses: cancer, heart attack, stroke, multiple sclerosis, benign brain tumour and dementia.
Customers can find out more information by calling 0800 678 3928 or visiting www.coop.co.uk/life