Imminent legislation is going affect the amount of critical illness cover people get for their cash. Mark Jones looks at the EU Gender Directive
French philosopher Jean-Baptiste Alphonse Karr once said: "Plus ça change, plus c'est la même chose" - the more things change, the more things stay the same. He clearly was not talking about the critical illness industry here.
Both the market and products have evolved significantly in the past decade, with product providers entering a new race to add ABI+ definitions and partial payments to their critical illness cover.
These changes have been happening against a backdrop of imminent European and domestic legislation for providers, advisers and consumers alike. The one thing we can be certain of is that things won't stay the same.
Originally designed to help people pay large private medical bills associated with cancer treatments, critical illness insurance now, more typically, provides people with a lump sum - often to cover a mortgage - if they are diagnosed with one of a wide range of specified illnesses. The market remains competitive, with providers developing new types of products while regularly reviewing and enhancing them.
One of the key reasons behind the evolution of the critical illness market is continued medical advances and therefore the improvement in the chances of surviving a major illness. While this in itself is a positive trend, it does require advisers to take into account the physical, financial and emotional consequences of individuals living with the impact of, in many cases, a life-altering serious illness.
The number of illnesses critical illness policies cover has steadily increased over the years, as the industry attempted to illustrate its commitment to offering clients the best value and most comprehensive cover.
This commitment has been further demonstrated by the recent trend of adding ABI+ definitions, which offers a more generous definition of an illness than the standard ABI terms dictate.
Switch of definition
The switch to ABI+ definitions benefits clients as it allows providers to pay out more claims. In the case of certain illnesses, such as multiple sclerosis, the use of ABI+ definitions means providers can pay claims earlier than they would on standard terms. Providers are also offering more partial payments for people with earlier stage conditions.
The advent of partial payments means that providers are able to exercise even more flexibility and provide much needed financial support to clients for a period of time, even if their condition may not warrant a full payment. Many products today offer partial payments on the most common conditions, such as prostate and breast cancer.
