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Critical illness policy will be ‘awash with positive changes’ this year – Lakey

by: Alan Lakey, director at CIExpert
  • 04/03/2022
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Critical illness policy will be ‘awash with positive changes’ this year – Lakey
In previous years the critical illness world has usually been awash with changes, initiatives and the general fiddling around with condition wordings that insurers love to indulge in.

However, when looking back over the last six months it is clear that Covid has suppressed insurers’ appetites for product development as there has only been three major adjustments.

Surprisingly, the final change of 2021 came back in July and saw Royal London upgrading its plans. The payout on additional payment conditions was increased from the lower of £25,000 or 25 per cent of the sum insured up to £30,000 or 50 per cent – a significant enhancement for sums over £100,000.

Children’s critical illness was also upgraded with the death benefit on enhanced child cover increased from £5,000 to £10,000. A further worthwhile improvement on enhanced child cover saw the age limit raised to 22nd birthday or 23rd birthday if the child is in full-time education.


Zurich stand-alone critical illness and LV= changes

The very first week of January saw Zurich introducing a standalone critical illness option for both its core and its select plans. One might reasonably ask why an insurer would launch such a plan when, at little or no cost, full life insurance can be included. However, standalone critical illness cover (CIC) purchases are substantially up whilst CIC with life are nearly 10 per cent down according to the latest Swiss Re Life and Health Watch.

Simultaneously, for its optional total and permanent disability Zurich has introduced an activity-based definition to run alongside the existing ‘own occupation’ version. Also, it has extended the end age on it to age 71.

The most recent change comes courtesy of LV=. At the end of January it added a budget plan to its roster, enabling it to compete with AIG, Aviva, HSBC, L&G and Zurich the insurers that also opt for a dual budget/quality approach. To gain added impetus, LV= is allowing its enhanced children’s cover as an optional extra.

The budget plan provides 38 100 per cent conditions plus two additional payment conditions – less advanced cancer of the breast and of the prostate.

The enhanced child cover comprises 57 conditions which pay the lower of £35,000 or 50 per cent of the adult sum insured plus 18 additional payment conditions paying the lower of £15,000 or 25 per cent of the adult cover. Additionally, if the child cover option is selected, female lives are insured for £5,000 if one of six pregnancy complication occurs.

A unique aspect of the LV= plans provides for nine of the adult conditions to receive a 50 per cent boost, up to £200,000, if the condition was caused by an accident. Furthermore, with the children’s cover, every cancer or less advanced cancer claim results in an immediate payment of £1,000.

So, whilst 2021 saw a reduction to the numbers of plan improvements it looks like 2022 will be awash with positive changes.

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