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Critical illness products: A recipe for consumer confusion – Laker

by: Sally Laker, managing director of Mortgage Intelligence
  • 13/10/2016
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Critical illness products: A recipe for consumer confusion – Laker
When Marcus Barnard initially created critical illness insurance, launched in October 1983 as Dread Disease Insurance, I wonder if he could foresee the development and innovation this insurance product would see 33 years in the future.

When first introduced only four conditions were covered, heart attack, stroke, cancer and coronary artery surgery – these four had wide definitions of cover.

Since this introduction in South Africa, not only has the product been adopted by the insurance markets in a large number of countries, but the conditions covered has also increased.

With increased conditions, however, the definitions of cover has been made more specific. We now have partial payments for less serious conditions and value added products such as Global Treatment, alongside a range of support services for policyholders and their families. Products continue to be adapted in line with research and development in treatment and even cures, which means conditions that were life threatening or life limiting 30 years ago are no longer as severe. Concentration on health and lifestyle will ultimately change things again in the near future.

However, with such comprehensive policies available do they just cause confusion for consumers?

Looking through life providers’ 2015 claim statistics, cancer, heart attack and stroke still remain as the top three conditions claimed for.

The topic of simplified critical illness products have been discussed by industry experts for the past few years, and in August this year AIG Life was the first to launch a product to market. The concern has always been if a simplified product covered the most claimed for conditions, could the premium price be lower than on a traditional product?

AIG’s Key3 product provides critical illness or life and critical illness and will pay out if the policyholder is diagnosed with cancer or suffer a heart attack or stroke. Policyholders will continue to benefit from AIG’s value added services such as Best Doctors.

The introduction of simplified products should complement the comprehensive propositions already in the market. Every client will have different circumstances, needs, budgets etc and it’s important that advisers have access to a wide range of policies. However if simplified products open the opportunity of a protection discussion to a wider audience, and introduce more consumers to the importance and need of critical illness, this can only have a positive impact on the overall insurance market.

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