IFAs would rather see definitions on guaranteed critical-illness policies continually tightened than lose them altogether, according to research by Legal & General.
L&G's survey of 400 IFAs found that new-generation CI cover products should be based on today's model rather than “radical” new designs.
Fifty-seven per cent of the IFAs offer only guaranteed premiums to clients while 42 per cent offer both guaranteed and reviewable rates.
When asked what might happen if guarantees become too expensive, 43 per cent of IFAs say they would probably recommend the reviewable product but the general view of advisers is that guaranteed premiums will not be unaffordable in the short term.
L&G protection event director Ronnie Martin says there was a high response from IFAs saying they would rather provide tiered benefits such as offering the full sum assured of guaranteed life cover but with a smaller sum assured of critical-illness cover to keep premiums down or use income protection as an alternative.
At the same time, IFAs had an “overwhelming preference” for guaranteed products, even if this meant tighter definitions.
L&G says the widely held view in the industry is that the CI market will not be sustainable in the future due to product developments and the withdrawing of guarantees.
Life Policies Direct director Jason King says: “I agree that the products should be simple to understand, flex-ible and compliant with ABI standards. I do not agree that critical-illness contracts should be combined with income protection. Our clients would prefer lump-sum payouts, with guaranteed definitions and guaranteed pre- miums, but some total and permanent disability underpin on payouts.”