Last November, we heard the unwelcome news that Canada Life had made a strategic decision to exit the individual protection market. Canada Life is a leading light in the group insurance market and their low two per cent penetration into the individual market convinced the accountants – that run insurers these days – to cut and run.
Not only does this reduce choice but it also removes the only insurer which offered discounted rates for vapers – all other insurers treat them as smokers.
December saw Aviva upgrade its business, D2C and Santander white-labelled plans to adopt the revised Association of British Insurers (ABI) minimum standard claim wordings (at this point, Aviva was the only insurer to do so).
This resulted in improved cancer and dementia claim wordings, which is always welcome.
All change in March
The biggest event of the year, so far, occurred in March when Vitality launched its revitalised serious illness products.
Historically, one of the arguments against Vitality has been the perceived complexity of its serious illness plans with the variations, options, etc. making it difficult for advisers and consumers to properly understand the coverage.
The new plans are labelled SIC1X, SIC2X and SIC3X. The SIC1X is a core plan where a claim reduces the sum insured (a stage 2 cancer claim would pay 50 per cent, leaving the plan with 50 per cent of the cover remaining) whereas SIC2X and SIC3X both provide for the cover to remain in force after a claim.
This is of huge importance because those policyholders who have successfully claimed for cancer, heart attack or stroke – the three big ones – are unlikely to be able to obtain any future critical illness protection. By way of example, somebody with a SIC3X plan who is diagnosed with a stage 2 cancer will be paid 100 per cent of the sum insured and can still claim up to 200 per cent of the sum insured in the future.
This is a substantial simplification and allows advisers to choose from a core, a comprehensive and a very comprehensive plan.
This launch coincides with CIExpert placing all current and historic Vitality plans on its comparison system. This ensures that all current adviser-supporting insurers as well as a host of D2C companies are on the system.
Also in March, Legal and General became the second insurer to incorporate the revised ABI model wordings within its plans. Unlike Aviva, they elected to add the exclusion for thyroid cancers that have not reached TNM Classification of Malignant Tumors (TNM) classification T2NOMO.
This means that early-stage malignant cancer of the thyroid is no longer covered unless it reaches stage 2, a change that mainly impacts female lives.
L&G took this opportunity to increase children’s critical illness payments up to a maximum £35,000 and additionally children’s terminal illness and funeral benefits are increased to £10,000 from the previous £5,000.
Family accommodation payments have also been improved from £1,000 to a maximum £3,000.
April updates
April saw another setback for choice and competition when Aegon announced it was selling its protection book to Royal London and exiting the market to focus on pensions and investments. It is hoped that this trend does not continue to the stage where only a few players remain operating.
Finally, in April, the ABI updated its Guide to Minimum Standards to clarify the exclusion relating to heart attack.
The version introduced in September 2022 excluded myocardial injury, but this caused concern because many online sites say that myocardial injury is a heart attack and may have stopped consumers from claiming. To combat this, the exclusion now additionally states “without myocardial infarction”.
All other insurers have until 16 September this year to adopt the ABI model wordings or to better them. This indicates a plethora of changes over the next five months.
