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Define time for critical cover

In recent weeks, new entrants have entered the critical-illness insurance market and some old players have returned. This has increased the number of companies offering reviewable and guaranteed rates.

The ABI is currently discussing definitions for the illnesses covered and articles on critical-illness insurance highlight how medical advances will affect claims experience.

Therefore, the critical-illness cover market is still evolving but we must not lose sight of the important cover this policy provides. Customers fear the big three illnesses of cancer, heart attack and stroke and the impact they could have on their lives and this product has a history of providing protection and piece of mind covering these and other illnesses.

A quick glance at recent Legal & General claims’ research proves that this cover is beneficial and that many customers are thankful that this cover was recommended to them. Even for those who have not yet needed to claim they have had some financial security knowing that if they are diagnosed with one of the critical illnesses then they are covered.

Some key points of this research are:87 per cent of all claim-ants are under 50, with 50 per cent being under 40, highlighting the need for this cover whatever the ages of your clients.

Policy sum asssured of claimants Less than 25,000 = 24% of claimants25,001-50,000 = 33% of claimants50,001-100,000 =33% of claimants100,001-150,000= 7% of claimants150,001-plus= 3% of claimants With the majority of policies having sums assured under 100,000 (nearly 60 per cent of claims are below 50,000), this suggests that customers may not have enough cover to clear their mortgage as the current average UK house price is 187,000 (Source: BBC).

If the cover is used to clear some of the mortgage, it may have freed up some disposable income but it is unfortunate that the claimant had little opportunity to use the sum assured for other reasons, such as paying for private healthcare or adapting their home to meet changes in lifestyle. More needs to be done to encourage customers to arrange adequate cover beyond the mortgage amount.

Illnesses paid on:60% of claims were for cancer 14% of claims were for heart attack or coronary heart disease7% of claims were for multiple sclerosis 7% of claims were for stroke 2% of claims were for permanent total disability 2% of claims were for benign brain tumourThe vast majority of claims fall within the core conditions as defined by the ABI and even though recovery rates for all these illnesses continue to increase, there is no doubt that each of these events could affect an individual’s lifestyle.

However, these numbers mask massive disparity between male and female claimants. Seventy-seven per cent of female claims were for cancer, whereas for males, this drops to 46 per cent with heart attacks accounting for 25 per cent.

These claimants had cover to provide them with some protection. What of those who do not have the cover or did not take up an adviser’s recommendations? The financial consequences of their illness would not have aided their recovery but could have added further stress in an already stressful situation. The payouts from critical-illness policies can be used to pay for alterations to a home, provide the opportunity to down shift to a less stressful occupation, repay some debt or pay for an extended holiday to aid recuperation.

Although this product is evolving, this should not get in the way of recommending this cover as it still provides valuable protection. Guaranteed and reviewable premiums offer the opportunity to personalise this valuable cover to customers’ budgets and risk profiles.

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