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Product matters

The ABI critical-illness working party reports in May on issues threatening the future of critical-illness insurance. In the meantime, UnumProvident has come up with a positive prognosis for the market in the shape of a revolutionary new product, Elixia123.

The original critical cover proposition was simple. A lump sum would be payable on diagnosis of a short list of life-threatening conditions. Competition extended the list of illnesses and conditions while medical advances lessened the impact of many illnesses. Impro-ved screening techniques led to earlier diagnosis and successful treatment of conditions such as prostate cancer.

Insurers are now concerned about increasing “windfall” claims. Are premium increases inevitable or is there an alternative?

Elixia123 groups critical illnesses into categories of severity, allowing customers to vary the level of cover for each category according to their particular concerns.

Category one covers conditions such as major heart attack, severe stroke or invasive cancer in instances where these are life-threatening or result in major lifestyle changes.

Category two covers conditions which are disabling and significantly impact lifestyle, such as blindness.

Category three covers traumatic conditions and possible lifestyle changes. Open-heart surgery, angioplasty and minor heart attacks are included.

Those with existing PHI cover may feel they need less category-two cover as some provision is already being made for the disability need. Policyholders can potentially claim under each category of cover.

John Hainsworth,IFA, Rickman Tooze

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