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Lucy Brown: Finding the right balance with protection flexibility

While providers should be applauded for innovation and flexibility, more choice can mean more complexity

Innovation around the provision of protection products and processes has long been called for to enable us to appeal to a wider audience.

With this in mind, it is great to see improvements in both critical illness and income protection products already this year.

Royal London and AIG last month announced enhancements to their policies, following positive developments towards the end of 2017 with the release of Aviva’s Living Costs Protection and AIG’s Instant Life Cover. We also have new providers due to enter the market this year.

The Royal London improvements now mean consumers have greater flexibility when it comes to choosing their critical illness contract. With most providers, children’s critical illness cover forms part and parcel of the main contract. Royal London has made children’s cover optional, so you can take standard or enhanced cover, or remove this benefit all together.

Lucy Brown: Children’s cover is a shining light for protection

Sadly, children’s cover is a growing area for claims, making it a valuable additional feature for some. However, as children’s critical illness comes with an associated cost it could lead to customers without children, or those who have older children, paying more than they need to. Making it an optional benefit could be a big win for Royal London.

Having the flexibility to add or remove features in line with life stages has always made perfect sense. Why pay for something you do not need?

As well as the ability to remove children’s cover, Royal London has followed in the footsteps of Aviva and also added the option to enhance it. Extra child specific conditions are now included, as well as paying a sum to those who experience certain complications in pregnancy.

Why protection providers must take a gamble

While covering children’s specific illnesses in itself is not new, the fact the amount for which you could claim has increased to 50 per cent of the sum assured up to a maximum of £50,000, across all main and child definitions does reflect a desire by Royal London to make a difference.  The additional adult benefits have now also been applied to the enhanced children’s cover.

But while providers should be applauded for innovating and offering consumers flexibility, with more choice can come more complexity. The call for innovation remains clear but it needs to continue to be relevant and easy to explain.  Otherwise there is the ever present risk of option paralysis and confusion, affecting both customers and advisers alike.

Lucy Brown is head of protection at London & Country

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