Norwich Union is to extend its £500,000 cap on individual critical-illness cover to include other policies either with the company or with rivals.
From August last year, a £500,000 cap was put on individual CI applications which will be imposed on an aggregate basis from March, meaning that other policies are to be counted into the total cover offered.
Applications of more than £250,000 already have to go through financial underwriting but NU is changing applications forms so people have to make a declaration of existing cover.
There is also a cap of £250,000 imposed on non-working partners applying on an individual basis. If applying as part of a joint policy where the second life is non-working, subject to certain conditions such as being connected to a mortgage, the cap is set at £500,000.
Head of protection product development Lawrence Jackson says the caps manage risk better, aligning cover more closely with need, and are in line with competitors. He says: “Clearly, it is bad news to the consumer where we are imposing these restrictions but on the positive side, we are still able to offer guaranteed critical-illness terms to the market which appears to be the product of choice. It is the price to pay to still be able to offer what is an attractive product.”
Direct Life & Pensions sales and marketing director Richard Verdin says: “Using aggregated caps is a reasonable step to take for any insurer which is looking to manage its risk.”