First Time
If this is your first time here then welcome! This page aims to explain what a 'Holloway Contract' is and how it works. You will also find a wealth of information throughout our site detailing our products and how we operate as a business.
Holloway Friendly was founded in 1880 based upon the principles of George Holloway the welfare and reforming MP for Stroud. Holloway Friendly and the contract that bears its name was the first provider of disability insurance in the UK hence the generic term ‘The Holloway Contract’.
What is a 'Holloway Contract'?
We have seen significant developments in income protection since George wrote his prize winning essay in 1878 but the 'Holloway Contract' remains true to his vision and is as valuable today as it was 130 years ago. Within a Holloway Contract you will find most or all of the following:
- No Occupational Loadings
- No Gender Loading
- No Smoker Loading
- Age Related Premiums
- An Investment Element
So what does that mean in practice?
Well, everyone that is accepted pays the same premiums no matter what they do for a living, whether or not they smoke or their gender. It's that simple.
What are Age Related Premiums?
Even in 1880 when George formed Holloway Friendly there was detailed actuarial data showing the increased risk of sickness that occurred with age. The older you got the more times you were sick and it took longer to recuperate so you were off for longer. It was his belief that the younger members should not bear the increase costs of this risk so premiums would be based on your age, keeping the policy simple and placing old and young members upon an equality.
So what does that mean in practice?
Well, unlike a level premium plan where this increased risk is hidden in a premium which is averaged over the term of the policy meaning the young policy holder is paying for their older risk, our premium rates increase on January 1st each year to reflect the age of a policy holder. It's a little like a pay as you go mobile phone, you pay for what you use not what you may use in the future.
How can Age Related Premiums be Guaranteed then?
Whether a policy has age related premiums has nothing to do with the premiums being guaranteed or reviewable, level premium policies can have reviewable premiums. Guaranteed or reviewable refers to the rights of the provider to change the base rates for the policy.
So what does that mean in practice?
Two of our policies, Purely IP & Classic Plus, have guaranteed rates meaning that once that policy is in force we cannot change the base rates. The Age Related increases are guaranteed at outset and are published in our rate tables.
What is the Investment Element?
Originally designed to provide an annuity at retirement an investment element remains on two of our policies, Classic Plus & Classic. George was concerned with what he saw as the scourge of pauperism and noted 'Some of us may possibly escape sickness altogether; if we die, somebody will be sure to bury us; but if we have made no provision for age – instead of sitting by our own firesides honoured by all around us, we shall end our days in misery and wretchedness, and die regretted by nobody.'
So what does that mean in practice?
With the introduction of the State Pension pauperism is no longer a concern but people may still wish to save a little extra for their future. Part of the premiums paid may be returned to the policy holder as an allocation of our profits. This fund then benefits from the income generated from the underlying investments, similar to a with-profits fund and potential tax free growth*
* under current legislation
