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Insurance Review 2013: The year of critical-illness product changes

Many companies have upgraded their products, with the focus on quality, and this can only be good news for advisers and consumers

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Product enhancements for critical illness cover dominated the protection market in 2013 with dozens of changes and improvements being made throughout the year.

Once the dust began to settle on the gender changes of 12 months ago insurers were soon busy seeing who could ‘out-do’ each other by adding improved benefits and new conditions to their critical illness plans, some of which are highlighted below.

Thankfully many insurers focused on the quality of cover and improved a range of areas including children’s cover, partial payments, ABI+ definitions and also re-defining criteria for common conditions such as heart attacks and strokes, all of which continue to improve the product.

Last year was the busiest year ever for companies upgrading their plans and competing on quality. The changes were 99 per cent positive and this can only be good news for consumers and advisers.

For consumers it is better because the plans are more comprehensive than before and advisers because it enables them to highlight the benefits of advice and to focus on value over price.

The timing of all these changes, which will no doubt continue in 2014, is interesting because the latest ABI ‘statement of best practice’ consultation for the UK CI market began this month. These reviews are important as they essentially allow the product to keep pace with advances in medical science while keeping the cost of cover relatively affordable.

There was some positive news on the income protection front as well with a couple of new products and a greater number of insurers now assessing more clients on an own occupation basis.

In 2014 we are likely to see more of the same. Insurers will continue to review and improve their policies wherever they can, which is something the media has picked up on as well with a number of articles in the national press towards the end of 2013 highlighting how CI cover has improved in recent years. 

With more than 90 per cent of claims now being paid and with the mortgage market more buoyant than for a long time protection should remain high on any mortgage advisers agenda, not just because it is financially worthwhile, not just because it increases the future value of your business, not just because commission still exists, but because it is so often the right thing to do.

News round-up

  • Skandia has expanded its critical illness policies to cover more diseases and increased the maximum age of applicants to 67. The firm has removed multiple system atrophy and progressive supranuclear palsy and replaced them with all-encompassing Parkinson-plus syndromes.
  • Aviva has enhanced its critical illness definitions for strokes and multiple sclerosis, two of the top five most-claimed for CI conditions. Under the new definitions, effective from 9 December on all new policies, MS patients are no longer required to present continuous symptoms for three months. Instead they only require a definite diagnosis with current symptoms.
  • PruProtect has further enhanced its Serious Illness Cover product, with a number of enhancements and now uniquely cover all heart attacks and strokes. The insurer also revealed that its overall new business has increased by almost a quarter in the intermediary market in recent months.
  • Adviser software provider, Capita Financial Software, has launched a market leading multi-benefit comparison service through its quote and e-apply portal, Webline. The new service gives advisers two different ways of accessing multi-benefit quotes through Webline. The first utilises a client focussed approach to researching protection, in contrast to the more traditional product focus adopted by portals.

Tip of the month: Make a new year’s resolution to protect your clients

At this time of year many people will be making resolutions such as joining a gym, going on a diet, cutting down on alcohol or giving up smoking.

But it isn’t only our bodies that can do with an MOT. It is a wise time to properly organise and protect family finances as well.

Reviewing which insurance policies are in place and whether clients have the best value deal can be a good way to make a saving. For instance, reviewing the life cover in place you could save hundreds of pounds over the term of the policy. The cost of cover differs greatly between insurers and there is a difference of over £1,000 between the cheapest and most expensive insurer, for a 40-year-old taking out £100,000 of level-term life cover over 25 years.

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