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Breaking-down the ‘momentous changes’ in critical illness insurance – CIExpert

by: Alan Lakey, director of CIExpert
  • 10/12/2018
  • 0
Breaking-down the ‘momentous changes’ in critical illness insurance – CIExpert
For those of us who consider critical illness to be an essential part of a strategic mortgage protection plan, 2018 has proved to be an extremely busy and even exciting year.


One reason is the publication of the Association of British Insurers’ (ABI’s) triennial Guide to Minimum Standards for Critical Illness cover, where insurers have to adhere to minimum standards by February 2019.

The second reason is the expanding appetite within many insurers for offering quality plans as opposed to the cheap and cheerful variety.

The main ABI alteration is to exclude Stage 1 thyroid cancer from the cancer definition.

We are yet to discover whether insurers will copy this minimum standard wording which serves to diminish the value of the definition by comparison with existing and historic plans.


Significant changes

Recent months have seen a number of significant changes that advisers may have missed among the tumult of other information released on a daily basis.

The myriad choices available and swiftly mutating contract terms can leave many advisers confused so here are the key changes.

This week Royal London has unveiled its second upgrade of 2018 with a number of initiatives including paying claims for low grade prostate cancers without the requirement for treatment.

It has also introduced a child-specific condition covering endovascular treatment for hole-in-the-heart surgery.


Area of fear for consumers

Legal & General recently increased the adult additional conditions payments from the lower of £25,000 or 25% up to the lower of £30,000 or 25%.

As many of these conditions are in situ or early stage cancers they are an area of fear for most consumers, so this is a valuable increase.

Another important announcement is the confirmation that unlike the parents’ cover, L&G’s children’s critical illness cover sum insured remains fixed at outset.

Back in October Aviva also enhanced its range of Life Assurance+ and Critical Illness+ plans. Extending children’s cover to age 22 was particularly noteworthy as was the addition of three new conditions to the upgraded child cover – Brain Abscess, Third Degree Burns (5%-19% of the body) and Type 1 Diabetes.

All three provide for a fixed payment of £25,000.

Aviva also became the first insurer to remove HIV as a critical condition, following on from the revised ABI guidance.


Momentous change

The most momentous change occurred in September when Zurich completely overhauled its plans creating a two-tier system with a 42-condition standard plan and a dearer, but far more comprehensive Select version which encompasses 99 conditions.

Zurich has made child cover an optional add-on and has recognised the greater financial impact that claiming at a younger age can have by doubling the payment (up to a maximum £100,000) for diagnosis of one of ten conditions before age 50.

Additionally, Zurich offers an optional child cover upgrade which extends cover from birth until 22nd birthday and includes a further six child specific conditions.

It has also doubled the child payment on diagnosis of cancer and provided a fixed £5,000 child death benefit as well as for certain pregnancy complications.


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