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FORMER SCOTTISH AMICABLE PRODUCTS MORTGAGE & SAVINGS CONTRACTS (GENERALLY CLOSED TO NEW BUSINESS) HOMEPURCHASER - FINAL VERSION AT DATE OF WITHDRAWAL
The choice of Waiver of Premium Benefit (WOP) was available to clients. It provides for premiums to be waived if the life/lives covered for WOP are off work through illness or accident, excluding the chosen deferred period.
Availability
On a single life basis or, for joint life cases, on either a nominated life basis or on both lives.
Age Limits
Age at entry of the selected life/lives must be between 17 and 55 next birthday.
Duration
Both the benefit and the charge will cease on the policy anniversary preceding the selected life's 60th birthday, irrespective of the maturity date of the plan. For joint life cases where WOP is on both lives, this age limit applies to each life separately.
Deferred Period
The deferred period (i.e. the period during each incapacity in which premiums are not waived) was chosen at outset and can be either 3, 6 or 12 months.
In joint life cases or where the Twin Plan Option has been selected both lives had to take the same deferred period.
Incapacity
There are three definitions of 'incapacity'. These are:
Standard Definition of Incapacity
This applies if neither the Special Definition nor the Activities of Daily Living Definition applies.
If the Standard Definition of Incapacity applies then, when we say that a life assured is suffering a period of 'incapacity' we mean that, throughout the period, he is totally unable, as a result of an accident or of an illness, to engage in the occupation in which he was engaged immediately prior to that accident or start of that illness. This is subject to the following 'modification':-
- The period of incapacity will come to an end if the life assured actually engages in any employment or occupation for profit or reward.
Special Definition of Incapacity
This applies if the policy schedule states that it applies, unless the Activities of Daily Living Definition applies.
The Special Definition of Incapacity is the same as the Standard Definition of Incapacity set out above but subject also to the additional modification:-
- If premiums have been waived in respect of a period of at least 24 consecutive months, 'incapacity' will mean the total inability of the Life Assured, as a result of an accident or of an illness, to engage in any occupation for which he is trained or fitted.
Activities of Daily Living Definition of Incapacity
This applies if the life assured is not engaged in a full time remunerative occupation immediately prior to the start of the period of incapacity.
If the Activities of Daily Living Definition of Incapacity applies then, when we say that a life assured is suffering a period of 'incapacity', we mean that he has become unable, as a result of an accident or an illness, to perform without assistance, at least 4 of the following 'Activities of Daily Living'
- dressing and undressing
- washing and bathing
- eating
- preparing food
- general household duties
- using the lavatory
- mobility (walking 400 metres without stopping and without considerable discomfort)
For joint life cases where both lives have WOP, it is possible that one life may be on the standard definition basis and the other will be on the special definition basis.
Waiver Benefit Charge
The charge is a percentage of the premium payable and is dependent on age next birthday at outset and the deferred period selected. Current rates for single lives are:
Charge as a percentage of premium
| Age next birthday at entry | 3 months | 6 months | 12 months |
| 17-35 | 2.6% | 1.8% | 1.7% |
| 36-45 | 3.1% | 2.3% | 2.1% |
| 46-55 | 4.3% | 3.3% | 3.0% |
The above rates apply to both males and females and occupation classes 1, 2, 3 and 4.
For low start plans, the percentage will be based on the actual premium payable in that year.
The waiver charging basis is not guaranteed in the policy i.e. will be allowed to change the actual charging basis for WOP already in place. It should be noted that waiver charges continue during any period in which premiums are waived and also that premiums will not reduce should waiver charges cease.
Acceptance Terms
WOP could be accepted under the simplified acceptance scheme or full underwriting. If non-standard terms apply, any ratings will be a multiple of the rates and will be applied throughout the policy term.
Exclusion clauses can also be applied on health or occupational/avocational grounds.
WOP may also be declined. If it has been declined and Mortgage Interest Benefit was to be included this will also be declined.
General Exclusions
No accident or illness is accepted as giving rise to a period of incapacity and no WOP will be available if the incapacity arises directly or indirectly, wholly or partly, from, or is made worse by, either of the following:-
- Infection by any HIV or AIDS or other similar or related condition (however, see Critical Illness)
- Pregnancy or childbirth or any complications arising from pregnancy or childbirth (unless the incapacity continues beyond a date 3 months after the pregnancy ceases, in which case, incapacity will be considered to have commenced 3 months after the pregnancy comes to an end).
No premium or part of a premium will be waived on account of a monthly anniversary when the life assured is resident outside the United Kingdom.
Waiver Period
The waiver period is calculated as a whole number of months, each month ending on a due date for payment of monthly premiums, but excluding the first 3, 6 or 12 months of incapacity (depending on the deferred period chosen). This applies whether premiums are payable monthly or yearly. Premiums due during the first 3, 6 or 12 months of incapacity are still payable by the policyholder in the normal way and if they are not paid then the waiver benefit lapses and the normal "non-payment of premiums" rules apply.
Linked Periods of Incapacity
If a period of incapacity, which results in a premium or part of a premium being waived, is followed by a further period of incapacity arising from the same accident or illness, such that no more than two monthly due dates occur between the periods of incapacity (even if premiums are, in fact, payable yearly), the two periods of incapacity are treated as one i.e. only the first 3, 6 or 12 months (depending on the deferred period chosen) of the first period of incapacity are excluded in determining the period of waiver.
Amount of Waiver Benefit
Where premiums are payable monthly, premiums due during the waiver period are waived. Where premiums are payable yearly, a proportion of the premium due at the beginning of the next policy year is waived. For example, if a policy year includes a waiver period of nine months and the yearly premium is £1,000, 9/12ths of the next premium due i.e. £750 is waived, the balance payable by the policyholder being £250.
Where increasing premiums have been selected the Waiver Benefit relates to the appropriately increased premium.
Paid Up Policies
WOP is cancelled and the waiver charge ceases if the policy is altered to a paid-up basis.
Claims
Claims should be submitted no later than 2 months before the end of the deferred period.
