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Insurancereview – September 2012

According to a range of statistics cancer represents around two thirds of all critical illness claims. It is also widely considered to be the main reason why most people consider buying cover. In fact, thereare more than 200 different types of cancer, each with different causes, symptoms and treatments.

Kevin Carr

However, traditionally CI plans do not cover some cancers, such as early stage breast or prostate cancer.

Such conditions are more common and thankfully often recovered from if detected and treated early.

Early stage cancers may not spread to other parts of the body and as such may not yet be life threatening, which means they are unlikely to meet the agreed standard definitions for cancer. As such, CI plans would be significantly higher in price if they covered all forms of early cancers in addition to covering more advanced stages.

While this helps to keep premiums at a more affordable level, for most people cancer is cancer and any diagnosis is likely to lead to a similar emotional reaction.

Even with early stage breast cancer there could be a notable amount of time away from work along with medical treatment, such as mastectomy or lumpectomy, which could also result in the need for replacement breast surgery.

While such cancers are not likely to result in a full pay out under a traditional CI policy an increasing number of providers are now paying a partial amount upon a claim, such as 10 or 20 per cent of the overall sum assured, which is to be welcomed.

Critics of the model suggest it is too complicated and that clients will expect a full pay out in the event of a claim. That said, home insurance doesn’t buy a new house if you flood the kitchen, so why should health insurance be any different?

Providers currently offering partial cover for early stage cancers:

Prostate: Aviva, Bright Grey, Friends Life, LV=, PruProtect, Scottish Provident.

Breast: Aegon, Ageas, Aviva, Bright Grey, L&G, LV=, Friends Life, PruProtect, Scottish Provident.

Source: CI Expert

The amount of CI claims which are paid is now averaging in excess of 90 per cent across the market and by paying more partial payment claims (instead of declining them) this amount should only increase further over time.

Insurers will vary in terms of exactly how much cover is offered and at which stage. The list opposite shows providers who are currently offering some form of partial or severity-based cover for either breast or prostate cancer.

Advisers also sometimes argue this development is complicating the market, but knowing which providers cover which cancers and at what stage is a key way of differentiating and adding value to the advice process.

4 BOXES (50 words each)

  • A new protection provider entered the market last month. Beagle Street Life Insurance, part of the BGL group, provides instant cover with no further underwriting that can be bought directly through comparison sites.

  • LV= has launched a website for advisers on the forthcoming gender directive and I-E tax changes. The adviser site, which is called ‘No more guess work’ summarises the changes, the key-dates and provides tool-kits for advisers to use. This follows guarantees from Ageas Protect, which vows to help customers who cannot be placed on risk immediately before the introduction of gender neutral pricing.

  • According to L&G almost half of their group income protection claims for cardiovascular conditions, such as heart disease, come from the manufacturing sector. An analysis of all the company’s group IP claims since 2000 show the manufacturing sector accounted for the greatest proportion of cardiovascular claims at 43 per cent.

  • Aviva has improved its critical-illness cover by covering three new partial payment conditions and upgrading five of its illness definitions. Each new condition will be eligible for a payment of up to £20,000, which is separate to the main policy, meaning the cover is still in place should the customer need to claim in the future.

SALES TIP (100)

Family Income Benefit

It’s arguably the best type of life cover with the worst name. A product with the words ‘income’ and ‘benefit’ in the title is hardly a marketing dream anyway, but when the abreviation is also a term for lieing it’s a full blown nightmare. But, it is a very under sold product that can save families money as well as providing more cover when they really need it. Put simply FIB is life cover (and/or CI) paid as an income instead of a lump sum. Premiums are lower because if you claim towards the end of the policy term there are a only few years of income left,. But earlier claims, when families are far less financially secure, could mean an income for 20-25yrs. Mortgages can be paid off in one go, or they can be paid off every month instead.

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