Are menu plans a clean solution for the CI or IP argument?


Mike Farrell, Director of Protection Sales

In the past, when some advisers were considering a protection solution for their clients, it could be viewed as a choice between recommending either income protection or critical illness.

A number were working under the illusion that there may have been too much duplication to consider taking out both covers. 

Sometimes it can be helpful to go back to first principles as both these products were designed with different outcomes in mind: income protection would replace a monthly or weekly payment; critical illness claimants would receive a lump sum should they suffer from one of the defined critical illnesses.

One could argue that advisers and clients should not be forced into a definitive choice between protecting their income, which underpins their lifestyle, or the potentially devastating financial effects of a serious illness.

It is interesting to note that advisers are increasingly recommending more menu-based solutions. It would appear, unsurprisingly that the protection market is moving away from single product solutions.

Insurers are now evolving their propositions to include more valuable, family-friendly features.

According to iPipeline market data, the amount of income protection policies sold as part of a multi-benefit policy rose by 8 per cent between Q4 2019 and Q1 2022.

In 2021, iPipeline also saw a 9 per cent rise in multi-benefit plans sold, with sales of single family income benefit policies falling as more business was written as part of a menu plan.

Menu-based solutions present a more tailored approach so that people can potentially maintain the family’s lifestyle at the same time as protecting their personal income, enabling them to strengthen an existing financial safety net or put one in place.

Menu plans are proving to be popular

Applicants can combine several protection policies into one process, spanning life cover, critical illness and income protection. This can be tailored to suit their budget and lifestyle needs, with the chance to adjust later as the client’s needs change.

Children’s cover can be added as the applicant’s family grows, with the ability to change features to balance risk and account for lifestyle changes.

As our lives are already bombarded with flexibility and convenience, it is only right that protection should follow suit.

For example, with some critical illness products, there is an option to take out enhanced children’s cover at an added cost, which includes cover for child-specific conditions, payments for pregnancy complications and increased payout levels. 

Insurers are now evolving their propositions to include more valuable, family-friendly features. As an industry, it is great to see more adviser recommendations that offer holistic, tailored and effective solutions that combine income protection, critical illness and life insurance in one application.

As our lives are already bombarded with flexibility and convenience, it is only right that protection should follow suit. Clients should be able to use different parts of their plan so that dependents within their household could also be covered.

For example, the benefit of inflation-linking income protection means that the income from the policy can meet rising day-to-day living expenses, while the lump sum from a critical illness policy could cover more immediate concerns regarding paying off a mortgage.

Budget options are now more important than ever

The latest findings of the LV Wealth and Wellbeing Monitor found that 38 per cent of UK adults had worried about money in the past three months.

Rising inflation and the unexpected leap in energy costs has affected the finances of many families, as 9 per cent of people surveyed were worried about the impact of interest rate rises on their mortgage repayments.

“It makes sense for menu plans to eventually become the go-to solution.”

Indexation, where premiums are linked to inflation, can make a big impact on income protection as the client’s income may need to withstand higher household bills in the future. By using a menu plan, advisers can choose to add a mix of inflation-linked or fixed cover options to best address their concerns.

LV’s longest running income protection claim started in 1987, paying out £93 a week. The claimant was diagnosed with epilepsy at 27 after suffering a brain haemorrhage, leaving her unable to work.

As index-linked cover was put in place, the weekly payout has risen to more than £270. In total, £390,000 has been paid out to the claimant over 36 years and the policy will continue until the end of the term in 2023.

Menu plan solutions in progress

As part of his menu plan, Neil took out both a budget personal sick pay (PSP) policy and a life and critical illness policy in 2016. He claimed on his PSP cover when he fractured his foot and needed about three months off work. We paid his claim until he was able to return to work, and he received benefits totalling just over £2,000.

He contacted us again at the end of 2021. He had just been diagnosed with bowel cancer and wanted to claim on both his life and critical illness policy and his PSP. We had a call with him to talk about his situation.

It was clear that he would not be able to work as a plasterer for some time as he was going to have chemotherapy, radiotherapy and then surgery. We obtained both the medical evidence and financial evidence to process the claim.

We were able to pay his £20,000 critical illness claim and his £1,000 a month PSP benefit. His PSP claim is still in payment and he has received more than £4,000 so far.

The example above shows that having a mix of combined and single policies can give people the support and breathing room that they need to overcome a financial life shock. Conditions such as cancer are clearly debilitating and can require extensive time off work.

There are many benefits in having a menu plan as the various covers can snap into action during different life stages and situations.

Advances in portal technology and interactive underwriting systems have enabled advisers to mix and match multi-benefit solutions from different providers, creating personalised cover for their clients.

It makes sense for menu plans to eventually become the go-to solution in many circumstances, as product design and technology continues to improve, making the advice journey more efficient.

An important part of the process is having conversations with clients to discuss solutions for when the worst happens. Part of that journey is looking at the risks that could cause a financial shock and how best to prepare for these eventualities.

Life insurance and critical illness can help with immediate concerns and there are obviously benefits to maintaining a regular income by using either income protection or family income benefit. Family income benefit is a type of life insurance that would pay out a monthly income instead of a lump sum on death, potentially offering an affordable alternative.

Case study

As an example, Matt and Jess are aged 35 and have a young daughter. They do not smoke and are planning to have more children in the future. While Matt earns £60,000 as a company director, Jess has a £25,000 salary as a part-time teacher.

As their salaries are different it makes more sense to have some joint insurance policies – products like income protection are held individually. The menu plan solution proposed below was devised as a budget option, while prioritising the features that the couple cared about maintaining the most.






Company director

Part-time teacher




Life & CI

Joint life and critical illness cover (includes enhanced children’s cover)

Family income benefit

Joint family income benefit (inflation-linked, worth £21,600 a year/£1,800 a month)


Joint life insurance (£100,000 sum assured)

Income protection

Income protection

Budget income protection (two-year term)


As Jess earns less than Matt’s salary, she has a budget income protection policy that has a 24-month limit on payouts from one claim. Her contributions to household finances are also considered when recommending the joint family income benefit policy, which would cover her contribution to the household bills if she unexpectedly died.

The children will also be covered by the joint critical illness cover as enhanced children’s cover is included in the recommendation. The maximum claim payment would potentially be doubled as both parents are named on the policy.

The couple also have a 25-year mortgage of £200,000, so it would be sensible to have life insurance in place to help clear some of the outstanding mortgage if one of them were to pass away.

“The dynamics of many families are diverse and constantly changing. Contemporary protection has moved beyond having a single insurance policy.”

If the couple had a bigger budget for their menu plan, Jess could have taken out a full income protection policy with a sick pay guarantee exclusively for teachers. The waiting period could also be adjusted to take into account her position as a teacher, so that income protection payouts could begin at the end of the sick pay period offered by her employer.

The dynamics of many families are diverse and constantly changing. Contemporary protection has moved beyond having a single insurance policy to provide a more flexible financial safety net.

Advisers have the freedom to easily design personalised and tailored protection solutions to suit the unique requirements of their clients, making a real difference to them and their families.

Does this mark the death of the income protection or critical illness argument? Not quite.

Clearly, depending on the client’s situation either or both products may be suitable. The key thing is for the adviser to have the conversation with clients concerning the risks that they face and to offer appropriate protection solutions that fit the circumstances that the clients are facing.

It is great to see the increase in menu sales and let us hope, with future improvements, that the use of menu-based solutions continues to grow and more families are protected.