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Protection Watch: Earlier claims payment and critical illness compared

Protection Review chief executive Kevin Carr looks at recent market events

Paying claims earlier

Paying claims is the most important thing the protection industry does – but paying claims sooner comes a close second.

British Friendly has received praise from brokers for trialing a new “immediate support payment” for claims received on income protection policies.

The initiative aims to help members receive financial support at the earliest possible stage, rather than waiting for medical evidence.

The maximum amount payable is £500 and if any claim is found to be invalid, the friendly society will reduce any future benefit payments accordingly.

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Drewberry director Tom Conner says: “This is an incredible initiative from British Friendly; one which should be highly commended. Deferred periods are often set to a length where the client will have exhausted sick pay and savings, and really need their income protection payments to kick in.

“Even though the claim payment will eventually be backdated to the end of the deferred period, if a claim is effectively on hold while medical evidence is being requested, which can often take a couple of months, it could put clients in financial difficulty during this interim period.

“It would be very welcome to see other providers follow British Friendly’s lead.”

Level or decreasing?

The Financial Ombudsman Service has attempted to clarify its position regarding recommending level cover on a decreasing loan or mortgage, which follows ongoing concerns among mortgage and protection specialists over recent FOS rulings.

Some policyholders have referred cases to the FOS on the basis they were mis-sold or over-sold cover, mainly because level cover is more expensive.

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A spokesman for the FOS says: “While decreasing cover is usually the appropriate cover for repayment mortgages, there can be circumstances where the sale of level term assurance is appropriate – and there should be some evidence the consumer had a defined need for the extra cover and was able to make an informed decision.”

Critical illness cover compared

A new critical illness comparison service for advisers promises to cut through the details of complicated policies and help with better recommendations.

The system, launched last year by F&TRC, includes product research based on views from independent medical experts and is free for advisers to use for the first 30 days.

Cavendish Ware associate director Roy McLoughlin says: “Having access to independent research tools is essential for both advisers and paraplanners to help them quickly navigate the policy wordings and product choices with confidence. The inclusion of expert medical opinions is very welcome.”

Also on the radar…

  • Apple has updated its health app in the US so that customers can see their medical records on their iPhone. The updated app brings together hospitals and clinics to enable customers to see their medical data whenever they choose. Industry experts say this could be a game changer for insurance underwriting should it be launched in the UK.
  • Royal London has updated its cover for children with customers now able to choose between “no cover”, “standard cover” and “enhanced cover”, which includes the addition of 12 child-specific conditions and an increased pay-out of 50 per cent of the sum assured to a maximum of £50,000.
  • Vitality has launched a new annual statement for policyholders that will show the total number of Vitality points earned for the current plan year, their Vitality status as well as the amount they have saved during over the period. The health and life insurer paid out £63m worth of additional value to its customers in 2017.

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  1. Readers should be aware CIExpert remains the industries first and foremost critical illness knowledgebase as its thousands of subscribers can attest.

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