View more on these topics

Critical issues to address on sales growth

Increased consumer awareness, the recognition of need and industry focus

have all contributed to a rise in sales of critical-illness cover,

particularly in the mid to late 1990s. Add to this the ABI statement of

best practice which brings clarity to consumers when comparing products and

it is good news all round.

However, just as the successful sporting team needs to build for the

future, it is at times like these that we must ensure the success continues.

It can be argued that it is not possible for a market to carry on

increasing at the rate experienced during the 1990s. Overall sales of

critical-illness policies did not show any increase in 2000 over the

previous year for the first time in a nine-year period (source: Swiss Re

Healthwatch 2001).

So, while critical-illness business in 2000 accounted for over 30 per cent

of all new individual regular-premium life policy sales – up from 24.5 per

cent – we should not be complacent. This increasing percentage is

exaggerated by falls in other product areas.

Are these figures indicative of a trend and, as such, a warning shot that

should not be ignored? Is there a danger that we will find ourselves

looking back in two or three years and saying we missed the signs in


We must guard against focusing solely on current debates around possible

advances in medical science, important though these are. Instead, we must

focus on the customer.

First, let us consider critical-illness cover to protect the mortgage.

Although it is true to say non-mortgage-related sales have increased, that

still leaves around two-thirds of cover that is mortgage-related. Does this

mean the fundamental reasons why criticalillness cover was developed have

been sidelined to meet only loan protection needs?

Perhaps, for understandable reasons, advisers feel that to move into the

non-mortgage-related protection area at the time when mortgage protection

is being put in place would result in protracted client meetings and

possible client resistance. Recent developments in menu-based sales systems

have now addressed this. Advisers can now move seamlessly from loan

protection to individual and family protection in a structured and simple

manner. In this way, the opportunity is created to present the full range

of protection choices to clients, including critical-illness cover over and

above the mortgage amount.

Second, we should consider affordability and value for money. This will

always be at the heart of any recommendation of protection cover.

With critical-illness cover, there can be differences in the lists of

illnesses on offer from providers. But to offer best advice, there are a

number of factors to consider and advisers should not rely wholly on the

number of conditions covered by a policy. Advisers need to look at a

combination of factors including illnesses covered, price and likelihood of

claiming. The difference in price, for example, could be 30 per cent for

the sake of a few extra conditions.

Statistics from Swiss Re show that 97 per cent of critical-illness claims

relate to the seven core conditions plus permanent total disability. So,

recommending a policy with a higher sum assured and value for money rather

than a longer list of conditions could be considered best advice.

Finally, IFAs should consider survival periods. Why have them? Well, it is

all about survival, isn&#39t it? So, 14, 21 or 28 days are all reasonable

timescales. Regrettably, however, a client may not survive a heart attack.

Clients should understand that life insurance needs should be addressed


Envisage the widow asking: “I thought this policy covered critical

illness? Well, my husband has died from a massive heart attack and he was

paying £30 a month for the last 15 years.” A combined life policy with

accelerated critical-illness cover can be a value-for-money alternative to

a stand-alone policy. There can be minimal differences in cost and the

issue of survival periods becomes irrelevant.

Opportunities are vast and, with continued focus on customer needs,

critical-illness sales will continue to prosper.


Plural Cavity

Greengrocers have often been pulled up for inappropriate use of theapostrophe when advertising their banana&#39s or artichoke&#39s. The Diary mustnow add Ron Sandler, the man commissioned by the Treasury to conduct areview into retail financial services, to the list of grammatical offenders. In the seven references to IFAs in Sandler&#39s consultation paper publishedlast week, an […]

Our view of the retail review

One promise to readers from the editor and staff at Money Marketing – atno point in this process will we censor or compromise our coverage of thereview process in order to gain the dubious distinction of getting to astory first. If we have to print an article a week after some of our moredove-like competitors, […]

Virgin in stakeholder fines warning

UK firms could face total fines of up to £2.5bn for not meeting theGovernment&#39s stakeholder regul-ations, according to Virgin Direct.According to Virgin&#39s research, there are around 50,270 comp-anies whichhave yet to act on their stakeholder compliance duties and could face finedof up to £50,000 by Opra.

Bringing annuities out in the open

“You could get up to 20 per cent more from your pension fund if you choosethe right annuity” is a typical media claim. Shopping around for yourannuity on retirement can mean you get a much higher income than you wouldby staying with your pension provider. This assertion is commonly coupled with the criticism that “pensioncompanies […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm