When doing so, they also extended the time period for insurers adopting or enhancing the changed wordings to the end of January 2024. With four months remaining we can anticipate an imminent flurry of critical illness plan changes.
Since my last article in April, the critical illness world has been unusually quiet with the main excitement emanating from Zurich which, during September, completed a major facelift to its plans.
Generally, we find insurers making modest adjustments such as adding a few conditions and tweaking some wordings, however Zurich opted to redesign the template with a number of brave and sensible initiatives.
Zurich setting the tone
It has introduced three levels of cover – Core, CI Enhanced and CI Enhanced Plus, offering a choice for advisers and their clients. Children’s critical illness has been made optional and stripped it into two strands – standard and enhanced. To either of these ‘pregnancy and early childhood cover’ can be added.
Core cover comprises 41 conditions whereas Enhanced includes a further 44 conditions such as mental health, neurodegenerative disorders and a range of early stage cancers. Enhanced Plus enjoys an increased sum paid for additional payment conditions from the standard £25,000 or 25 per cent to £50,000 or 50 per cent.
Additionally, the Enhanced Plus includes 16 conditions, such as brain injury, heart failure and paralysis where diagnosis before age 55 results in the payment being doubled, subject to a maximum of £200,000. This reflects the reality that diagnosis at such an early age produces a far greater financial burden than at age 60 or 65.
There are three parts to ‘pregnancy and early childhood cover’.
There are six complications of pregnancy and four birth defect conditions which provide a fixed £5,000 payment whereas the 10 specific children’s conditions will, like the main children’s cover, pay a sum between £10,000 and £100,000 depending on what amount the policyholder has selected.
The optional ‘pregnancy and early childhood cover’ is where the design is ground-breaking. The majority of congenital conditions such as Down’s Syndrome, cerebral palsy and spina bifida are diagnosed at or shortly after birth with a small number of diagnoses in the following years.
By packaging the child specific conditions as a separate option, Zurich has ensured that those policyholders with older children are able to remove the congenital and birth-linked conditions that they can no longer claim for.
Within its Enhanced cover, Zurich has also added a wide-ranging condition called neurodegenerative disorders. There are many rare but nonetheless permanently disabling conditions that because they are not specifically named could fail to register as a successful claim and this ‘umbrella condition’ ensures that they won’t fall through the cracks.
The ability to design clients’ plans around their specific needs resonates with the Consumer Duty requirements of ‘fair value’ and good outcomes.
However, the child cover permutations within the Zurich plan represent a challenge for advisers using the various portals.
Moving with the times
With this in mind, CIExpert has introduced a Customiser Tool enabling all 15 Zurich policy variants to be selected for comparison purposes. Additionally, because the portals are unable to provide premiums for the range of children’s sums insured, the Customiser Tool is able to show the correct premium for any level of cover between £10,000 to £100,000.
Thus, the cost implications of selecting different categories and levels of children’s cover can be seen and assessed.
This type of design is likely to be replicated by the other insurers who will be keeping a close eye on Zurich’s business levels, so we anticipate further change to come in the market that will benefit the consumer and support the industry in their Consumer Duty requirements.
