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A welcome addition from Aviva

Aviva Health UK – Group Critical Illness Cover

Type: Group critical illness cover

Minimum premium/minimum cover: £750 a year/none

Maximum cover: The lower of five times salary or £500,000 gross

Conditions covered: Standard – Alzheimer’s disease, cancer, coronary artery by-pass grafts, Creutzfeldt-Jakob disease, dementia, heart attack, kidney failure, major organ transplant, motor neurone disease, multiple sclerosis, Parkinson’s disease, stroke, extended – standard list of conditions plus aortic graft surgery, aplastic anaemia, bacterial meningitis, benign brain tumour, blindness, cardiomyopathy, coma, coronary angioplasty, deafness, encephalitis, heart valve replacement or repair, HIV infection, liver failure, loss of hands or feet, loss of independent existence, loss of speech, paralysis of limbs, pulmonary artery graft surgery, respiratory failure, rheumatoid arthritis, terminal illness, third degree burns, total permanent disability, traumatic head injury

Minimum-maximum ages: 18 to 69, six months to 17 years for children

Minimum group size: Five

Options: Cover for husbands, wives and civil partners up to £125,000, standard or extended list of conditions, children’s cover 25% of employee’s benefit, each child up to £20,000 gross, available on a company paid or self-funded basis, or as part of a flexible benefits package

Commission: Subject to negotiation

Contact: www.aviva.co.uk/healthcarezone

Aviva’s group critical illness cover can be offered by businesses with at least five employees as a standalone plan or as part of a complete benefits package.

It is designed to pay a cash lump sum on diagnosis of a critical illness or following a surgical procedure, where the employee survives for at least 14 days or six months in the case of total permanent disability.

The plan has two levels of cover and there is no need for medical underwriting, as pre-existing conditions are excluded. Premiums can be calculated on a single priced basis, where premiums are calculated for each member and recalculated each year to rise in line with members’ ages. Alternatively premiums can be unit-priced, with a flat rate for all members based on a total of all the benefits for every member and the number of members.

Putting the product in to its market context, Highclere Financial Services partner Alan Lakey says: “Aviva has been busy enhancing its employee benefits roster and has now introduced a group critical Illness plan. It offers two levels of cover, a standard version which covers 12 conditions and an extended version which adds a further 24 conditions.”

Lakey points out that Aviva’s group plan is wider ranging and more comprehensive than its individual plan. “The extended version includes conditions such as rheumatoid arthritis, coronary angioplasty and emphysema which are not available within Aviva’s individual product. Previously, Aviva described these conditions as unworthy of inclusion and argued that they are already covered within other definitions such as heart attack and permanent and total disability,” he says.

Nonetheless, he thinks these additions enhance the group product and extend the breadth of cover.

“The plan is available to groups of five and over and unusually offers up to five times income up to a maximum of £500,000. He adds that up to £125,000 spouse/partner cover is available as an option.

“The basic version offers a simplicity and also a cost reduction that is likely to prove attractive to those employers who are wary due to the current economic turmoil,” says Lakey.

Turning to the potential drawbacks of the plan Lakey says: “The plan has no medical underwriting as all pre-existing conditions are excluded which is both good and bad.” He explains that it is good, as it makes for an easier process but it is bad as it will naturally reduce payouts.

“The plan has a 14-day survival period, which is better than most group competitors although something that is pretty much standard with individual plans. The vast majority of individual plans include life cover so this is not usually a concern. However, if no group life cover is in place then it could provide for some unfortunate outcomes. It would be treating customers fairly for this qualifying period to be removed,” he says.

Identifying firms that could provide the main competition, Lakey says: “Unum’s extra cover plan is very good plan, as is the comprehensive version offered by Bupa. Bupa has the brand awareness that Aviva formerly enjoyed under the Norwich Union name. Canada Life offers up to seven times salary, so they will also be in contention.”

Summing up, Lakey says: “Overall, this product is a welcome addition to a market which, traditionally, has been somewhat ignored by many of the critical illness luminaries. “

BROKER RATINGS

Suitability to market: Good

Flexibility: Good

Cover provided: Good

Overall 7/10

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