Traditionally, when a protection provider receives a valid life insurance claim, they pay a cash benefit to the family of the deceased. The aim is to help to solve any financial problems caused by the death. But cash is usually all that the cover provides.
Critical-illness products pay a cash amount to help solve any financial problems caused by the claimant's illness while income protection pays an income to solve any financial problems caused by their inability to work.
Apart from income protection, where there will be ongoing monitoring of the claim, the provider does not offer any other service once it has paid the claim. Very often, this is the end of the relationship with the client.
But sometimes cash may not be enough. Other forms of insurance do offer extra services and help to customers. Take car breakdown insurance, for example. This does not pay a cash benefit. Imagine you were driving along the motorway and your car broke down. You would definitely need more than just cash at that point.
If the AA van arrived, the engineer had a look at your car, announced that it would cost £1,000 to fix, handed you a cheque for £1,000 and drove away, you would not be very happy. You would need the expertise of someone to get your car moving again.
People might need more than just money when facing a critical illness. At any other time, receiving a cheque for £250,000 would be very exciting but a cheque for that amount following diagnosis of a serious illness such as cancer would not be the same as a lottery win.
This individual could be facing months of treatment, uncertainty and the possibility of never making a full recovery. Hardly cause for celebration. They will also be facing all the associated emotional problems, fears and unknowns that a cheque cannot help them with. Patients get precious few minutes with their GPs and specialists, often waiting many weeks to see them.
A recent development in the protection market has been access for policyholders and claimants to medical experts who can help with their recovery.
These value-added services usually fall into two main types. First, there are helplines where clients can get access to medical and legal experts and often counsellors. Companies that offer unemployment cover may be able to put clients in touch with career advisers or at least someone who can help them put together a CV.
Second, for critical-illness and income-protection claims, some companies have developed a service where a personal nurse adviser can visit clients to give practical and emotional support, advice on how to cope with treatments and help in putting together a list of questions that the client can ask their specialist.
Some providers have added the Best Doctors service to their critical-illness plans to give claimants access to treatment from specialists around the world. An increasing number of income-protection providers are also trying to help clients get back to work. This might involve paying for physiotherapy or other treatments and could start even before the claim is paid.
But how much are people prepared to pay for these extra benefits? As valuable as they are, the products to which they are attached are still very price-driven. If the provider comes up with a basket of extra services which pushes their price out of the ballpark, no matter how useful the extras are, it is unlikely they will be recommended. Consequently, the extras tend to come free and are bundled into the package at no extra cost or at least the cost is absorbed into the premium rate. The companies that offer them still try and remain competitively priced. This is positive news for clients.
But even if plans are more expensive, it might be worth spending the extra pennies a month to get access to these services because they really can make a difference.
We know that consumers tend to dislike protection products, find them complicated and feel that they will only get something back if something horrible happens. The extra non-financial benefits available on today's protection products mean we can change this message into one that is more positive. We can promote recovery, getting back to work and getting lifestyles back on track, as well as the financial benefits. This can make fairly dull products appear a little more attractive.