Rebroking CI policies can be difficult, with advisers having to ensure they have the right processes in place to show they are working in the best interest of the client. Adam Higgs points to the improvements made in the field
Rebroking critical illness (CI)policies can be a hazardous task, with advisers now requiring an in-depth knowledge of CI conditions, the treatments that will lead to a claim, and other policy features to ascertain if the client would be in a better position by switching to a different policy.
It has been well publicised that modern day CI policies have stricter definitions than older policies, which may have been sold many years ago. However, there is less publicity around the areas where valuable improvements have been made.
A prime example of this is in children's cover, which many providers state is one of the most common causes for claims on CI cover. Until about ten to fifteen years ago, many providers did not even include children's cover as part of their critical illness proposition. Since then, the number of conditions covered, as well as other non-CI-related benefits for children have increased considerably.
While most CI policies will now cover the life assured's children for the full range of critical illnesses, the range of non-CI-related benefits available can vary. Some of the more well-known benefits include a lump sum of up to £5,000 on the death of a child to help parents with funeral costs, and an accidental hospitalisation benefit where the life assured can claim if a child is admitted to hospital for more than 28 consecutive days.
Lesser-known benefits
There are, however, lesser-known benefits that could add real value to contracts. Legal & General, for example, will offer up to £1,000 towards childcare if the life assured claims for a critical illness and has a child under five years old. It also offers a benefit of £100 for every night a child is required to spend in hospital following a critical illness claim up to a maximum of £1,000.
Ageas offers to double the children's CI benefit paid if the child cannot be treated in the UK but a proven treatment is available abroad. PruProtect allows clients to buy additional children's cover, if required.
As with adult CI conditions and benefits there are certain caveats to the children's cover provided. Most providers will not pay a claim if it is within the first 30 days of the child's life. Dependent on the provider, the maximum age is between 18 and 23 with most requiring that the child to be in full-time education if the child is over 18.
As with adult CI claims, there is a standard survival period of between 10 and 14 days. However, the number of conditions covered for children are often less than adults, with total and permanent disability being the most commonly excluded condition.
Product comparison
The task of comparing products based on their relative merits can be an arduous one, but there are some systems that are designed to help advisers. CIExpert, Defaqto Engage, Capita's Synaptic and F&TRC's Quality Analyser all have propositions that enable advisers to compare protection products based on different criteria other than price. While price is always a factor, it is not the only consideration for advisers - and such systems can help advisers compare policies based on the relevant merits of the cover being provided.
Combining this quality analysis with the price of cover provided by a quotation portal could then give the adviser a very different measure of the product's relative value.
When rebroking policies, it is particularly important to give valid justifications as to why the new cover is better than the existing cover, whether this is because the definitions of CI are more comprehensive and/or there are additional benefits provided that are valuable to the client.
Building a compliant case that documents the reason why certain policies have been selected above others, and providing a complete audit trail of why a certain recommendation has been made is key, and each of the systems identified can offer these capabilities.
One thing that is clear is without detailed comparison systems to help advisers compare protection products, advisers will need to spend more time collating the information themselves and documenting the reasons as to why a recommendation has been made.
Systems that can help reduce this burden on the adviser, while also providing a valuable audit trail, can not only help advisers rebroke policies compliantly but also free up their time to write more protection policies.
With the FCA paying increasing attention to replacement business on pension and investment business, it is not a stretch to think that they might start focusing on similar matters in protection. Advisers should therefore make sure that they have the right systems and controls in place to help them demonstrate that the advice they are giving is in the best interests of the client.
Adam Higgs is head of research adviser services at F&TRC
