Robert Morrison takes a look at critical illness cover and sings the praises of traditional CI over severity based policies.
But appearances can be deceptive. In fact, a review of 100 conditions covered under a serious illness product reveals around half of these conditions could actually
be covered under other broader definitions of a standard CI product.
Cancer definitions provide a good example of this. Whereas one provider might choose to list advanced chronic lymphocytic leukaemia, advanced Hodgkin’s disease, advanced non-Hodgkin’s disease, cancer and multiple myeloma separately, each of these would be covered by the ‘cancer’ definition under many CI policy terms.
Similarly, many other individual conditions such as chronic obstructive pulmonary disease and primary pulmonary hypertension could be covered by ‘total permanent disability’ (TPD) under traditional CI definitions (which is in itself a caution for advisers and customers to consider whether TPD is included as standard in CI policies).
Simple and transparent products
Given that our industry is often criticised for being complex and impenetrable to consumers, shouldn’t we then be looking to offer products that are as simple and transparent as possible?
Many providers now provide partial payments for their CI policy holders which sit outside the sum assured. For example, new Aviva CI customers are now able to receive partial payments for two early forms of cancer: low-grade prostate cancer and ductal carcinoma in situ. For these conditions, claimants will receive a lump sum of up to £20,000.
The partial payments are usually an additional benefit, separate to the main policy, which means the policy continues to be in place with the full sum assured, should the customer need to make a further claim in the future. With severity based products this is not the case, as any payments come out of the same pot.
As an aside it is important to cover all forms of recognised surgical treatments. This is particularly important for breast cancer patients, given that many critical illness policies only cover mastectomy.
About a third of breast cancer cases are treated by a mastectomy, compared to two thirds treated by lumpectomy, which underlines the importance of covering several types of treatment.
Many insurers are more restrictive about types of treatment. As a result, it is important for the customer to understand what is and is not covered under their policy, so they need not worry about having the ‘wrong’ type of treatment to make a claim.
Talking of partial payments, this brings us nicely onto the subject of payments received under severity based CI. And, to be blunt, when it comes to reasons for considering traditional CI over serious illness cover, the best is saved until last.
