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Ignoring existing protection plans and inadequate research creates compliance issues – Lakey

by: Alan Lakey, director of CI Expert
  • 04/09/2020
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Ignoring existing protection plans and inadequate research creates compliance issues – Lakey
Like many other events, critical illness plan adjustments have been thwarted by the coronavirus outbreak.

 

Many early to mid-year intentions have been placed on the backburner with a view to introducing them in autumn and early winter months and so September and October are going to be far busier than usual.

The year started briskly with Scottish Widows and LV= improving their plans, as covered in depth in my February round up.

 

Royal London

Mid-March found Royal London introducing numerous changes. Like Aviva and L&G it has removed HIV as a condition and included removal of an eyeball. Four additional payment conditions were added – carotid artery stenosis, cerebral or spinal aneurysm, cerebral or spinal arteriovenous malformation and non-malignant tumour of the pituitary gland.

Brain injury due to anoxia or hypoxia has been merged with traumatic brain injury to sensibly consolidate two conditions with similar claim requirements.

Similarly, dementia and Alzheimer’s disease have finally been merged into a single condition. This has long been a source of exasperation because Alzheimer’s disease is a form of dementia and while its inclusion bulked up condition numbers, it was pointless.

Pulmonary hypertension had its reach extended by removal of the need for it to be primary.

The drug or alcohol exclusions have been removed from accidental hospitalisation, benign brain or spinal cord tumour, coma, intensive care and liver failure – all of which increase the potential for future claims.

The final improvement related to extending the age range for child cover to 21st birthday or 23rd birthday if in full-time education.

 

Aegon

Early April brought a number of alterations from Aegon. Like Royal London, it merged brain injury due to anoxia or hypoxia and traumatic brain injury and also removed the drug or alcohol exclusion from liver failure, loss of limb and paralysis.

Other notable improvements included radiotherapy and chemotherapy being added as treatments for benign brain tumour and the cardiomyopathy definition now allowing either a reduced ejection fraction or New York heart association III as triggers for a claim.

Early stage prostate cancer can now be treated by hormone therapy, brachytherapy or radiotherapy. The deafness trigger has been reduced from 90db to 70db in the better ear. A number of other conditions have been reworded or slightly enhanced.

Unusually Aegon decided to remove a number of conditions that result in few if any claims – accidental hospitalisation, critical fracture cover, donor cover, intensive care, paralysis, removal of an eyeball and rheumatoid arthritis.

Finally, child cover has been extended to end at 22nd birthday instead of 21st and the survival period cut from 14 to 10 days.

 

LV=

Unsurprisingly May and June passed without change, then in July LV= introduced its second upgrade of the year – this time focusing only on child-related cover.

Ten new child specific conditions were added – cerebral palsy, cystic fibrosis, diabetes type 1, Down’s Syndrome, Edward’s Syndrome, hydrocephalus, intensive care, muscular dystrophy, Patau Syndrome and spina bifida.

Additionally, the £5,000 child death benefit was extended to include stillbirth. As with some competitors, a fixed £5,000 payment for certain named pregnancy complications was introduced.

 

Aviva

In late August, Aviva made headlines for the welcome slimming down of its condition numbers. Previously it had led the way in the removal of HIV and loss of speech.

On this occasion stroke and spinal cord stroke were integrated into one condition and similarly brain injury due to anoxia or hypoxia and traumatic brain injury.

Logically, Aviva also recognised that sixteen less advanced cancers used identical surgery requirements so these have been removed with the creation of two new wider-ranging conditions – less advanced cancer in situ with surgery and low malignant tumour of gastro-intestinal stromal (GIST) and neuroendocrine (NET) types. Not only has this reduced sixteen conditions to two but has also served to widen the coverage as other in situ cancers will fall within the scope of the claim wordings.

As August draws to an end HSBC has opted to remove HIV form its roster of conditions.

 

Two key messages

There are two messages from the year thus far.

First, plans are continuing to be improved which is good for consumers and readily enables advisers to strike up sensible conversations with their clients.

The second relates to the greater focus on simplifying plans rather than the mad dash to add yet more conditions, many of which will never result in a claim.

The regular review of existing plans is something I endorse.

The Financial Ombudsman Service (FOS) regularly receives complaints from policyholders where a claim has been denied because their old plan did not include the condition being claimed for yet the insurers current plan now includes it.

Professional indemnity (PI) insurers also now ask what research is carried out when re-broking critical illness plans.

Clearly this is an area where ignoring existing plans or failing to adequately research alternatives can create compliance problems and potentially trigger a complaint.

 

 

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