Overview: Elixia 123 is a standalone critical illness (CI) term product. It divides illness types i...
Overview: Elixia 123 is a standalone critical illness (CI) term product.
It divides illness types into three categories depending on severity: Category one: Life threatening Category two: Disabling Category three: Traumatic It is then possible to choose different levels of cover for each category to suit client needs, with a minimum of 10% of the sum assured in any category.
Examples may be: Profile A: Category one: 100% Category two: 100% Category three: 100% This matches a traditional CI policy structure.
The full sum assured will pay out if the insured is diagnosed with a CI event in any of the three categories.
Once payment has been made the plan will end.
Profile B: Category one:100% Category two: 10% Category three: 10% This will pay out the full sum assured if the insured suffers any of the events in category one.
It will pay out 10% of the sum assured if they suffer any events from categories two or three.
Premiums are significantly lower than profile A, but the plan provides full cover for the most threatening CI events.
If a claim is made against category two or three, 10% is paid, the sum assured for the other categories decreases by 10% and the plan remains in force until the term ends or a claim is made under category one.
The total claims cannot exceed the original sum assured.
Profile C: Category one:100% Category two: 25% Category three: 25% This provides maximum payout for a category one event.
If this happened first the full sum assured would pay out and the plan would come to an end.
Alternatively, if category two happened first then 25% would be paid leaving 75%.
Profile D: Category one: 25% Category two: 100% Category three: 10% This provides a maximum payout for a category two event.
Maximum age at commencement of insured CI: 64 Maximum expiry age: 70 Maximum sum assured where CI is included: £250,000.
Reviewable premium rates: Premiums are guaranteed not to change for at least the first five years of the plan unless cover is changed.
However, in future, UnumProvident may have to change the premium payments because of factors such as claims costs and associated expenses.
UnumProvident will write to tell all policyholders what the new premium will be before any increase takes place.
If the cover increases at any time, the premium will go up to pay for it based on age and other factors at the time.
The benefits do not depend on investment performance.
Sum assured indexation in line with RPI: Benefits can be designed to increase in line with RPI.
Basis on which indexation increases are costed: Age at increase Waiver of premium (WOP) available: If WOP benefit is selected, UnumProvident will pay the premiums on the policyholders behalf if, for a period of six months or more, they suffer an illness or injury that prevents them doing a number of basic activities that have to be performed in work and in daily life.
UnumProvident will pay the premiums on behalf of the policyholder from the seventh month of incapacity for as long as the claim is valid or until the plan ends.
There is an extra cost for including this protection.
Waiver with 26 weeks/six month deferred period: Premiums will be paid where incapacity continues for six months or more.
Age waiver cover ceases: 70 Default waiver definition of disability: Ability to carry out a number of daily activities.
Activities not specified.
Claim can be made while still working.
Activities of daily living: 1.
Walking – Walk 200 metres on the flat without severe discomfort.
Mobility – All of the following: walk up or down a flight of 12 stairs; get in or out of a standard saloon car; and bend or kneel down to pick up something from the floor and straighten up again.
Dressing – Put on and take off items of clothing which are normally worn.
Communicating – Answer a telephone and relay a message.
Reading – The eyesight, if necessary as adjusted by the use of spectacles, contact lenses or other means, to read a newspaper.
Writing – The manual dexterity necessary to write.
Eating – Use cutlery to eat a meal that has already been prepared.
Hygiene – Wash oneself all over.
Continence – Manage bowel and bladder function, including through the use of protective undergarment or surgical appliances.
Guaranteed insurability option (GIO): Ability to increase cover without underwriting in certain 'life events'.
This must be effected before the 55th birthday and within three months of the life event.
Events include marriage, birth or legal adoption of a child, increasing mortgage (to move or for home improvements), or an increase in a share of a business.
Benefit may be increased by up to 50% on each special event, subject to an overall maximum of £50,000 for any category.
Maximum increase available for birth option: Yes.
Maximum increase the lower of £25,000 and 25% of original benefit.
Period within which a claim must be notified: Three months Number of core critical conditions as defined by ABI/IFAA: Seven.
Cancer – Category one invasive.
Life threatening/cancer for category three.
Coronary artery bypass – Category three Heart attack – Category one Heart attack – Category three Kidney failure – Category one Major organ transplant – Category one Multiple sclerosis – Category two Stroke – Category one/stroke – Category three Number of ABI/IFAA additional conditions covered:13 Aorta graft surgery – Category three Benign brain tumour – Category three Blindness – Category two Coma – Category three Deafness – Category two Heart value replacement – Category three Loss of limb – Category two Loss of speech – Category two Motor neurone disease – Category two Paralysis/Paraplegia – Category two Parkinson's disease – Category two Terminal illness – Category one Third degree burns – Category two Number of other conditions covered: 13 Aids through blood transfusion – Category two Aids occupation – Category two Alzheimer's disease – Category two Angioplasty – Category three Creutzfeldt-Jacob disease – Category one Liver failure – Category one Loss of independence – Category two Major head trauma - Category two Mastectomy – Category three Open heart surgery – Category three Pre-senile dementia – Category two Chronic emphysema – Category one Balloon valvuloplasty – Category three Survival period for CI claims: 14 days.
Child maximum benefit: This will pay out 25% of the benefit amount under the relevant category, with a maximum payout of £25,000 per child.
Minimum age for children's benefit: 30 days Child maximum age: 18 years old Basis for inclusion of TPD: Automatically available with CI.
No.
of TPD definitions available: Two.
Own occupation or ADLs (three out of nine fails).
Exclusions applicable to CI: one
Analyst's comment
Although not a new entry to the market, the Elixia 123 plan from UnumProvident may offer an insight into the future of critical illness (CI) insurance in the UK.
The plan splits the conditions cove red into one of three groups: life threatening, disabling or traumatic.
The proposer can then select the percentage of the overall sum assured payable for each group.
If 100% is selected for all three categories, the policy is then broadly similar to a traditional plan.
This flexibility allows the amount payable to be tailored to the perceived impact on lifestyle, with the facility to change the balance in the future as circumstances change.
By offering the ability to link benefits to lifestyle impact, premiums are extre mely competitive compared to the rest of the reviewable rate market.
This, of course, makes Elixia attractive to clients with a limited budget.
From the adviser's perspective, the key is ensuring that the client is clear about the difference between Elixia and other plans being considered.
Although competitively priced, the absence of an own occupation definition for waiver is disappointing and the inability to arrange cover on a joint life first event basis may be seen by some as a hindrance in certain scenarios.
Despite these omissions, Elixia is certainly a plan worthy of consideration not least in recognition of UnumProvident going it alone to address the issue of impact-based CI cover.
Nick Telfer, head of life and protection, Defaqto
