Type: Individual critical-illness protection plan
Minimum-maximum ages: One month-69
Minimum term: Six years for level cover, 10 years for decreasing cover
Minimum premium/cover: £7.50 a month or £75 a year/no minimum
Maximum cover: £2m
Conditions covered: Alzheimer’s disease, Aorta graft surgery, aplastic anaemia, bacterial meningitis, benign brain tumour, blindness, cancer, cardiomyopathy, coma, coronary artery by-pass grafts, Creutzfeldt-Jacob disease, deafness, dementia, encephalitis, heart attack, heart valve replacement or repair, HIV infection, kidney failure, liver failure, loss of hands or feet, loss of speech, major organ transplant, mastectomy, motor neurone disease, multiple sclerosis, open heart surgery, paralysis of limbs, Parkinson’s disease, permanent and total disability before age 60, primary pulmonary hypertension, progressive supra nuclear palsy, respiratory failure, stroke, systemic lupus erythematosus, third degree burns, traumatic head injury
Options: Single or joint lives, level or decreasing cover, mortgage increase and extension option, guaranteed insurability special events option on level cover only, waiver of premium, free critical illness cover for up to three months before the plan starts if applicant is taking out a new mortgage
Commission: Menu-based with flexible split between initial and renewal commission
Friends Provident has enhanced its critical illness protection plan by adding mastectomy cover and improving the definitions of heart attack, benign brain tumour, coronary artery by-pass grafts, heart valve replacement/repair and coma.
Highclere Financial Services partner Alan Lakey notes that Friends Provident has a compelling history, with its Quaker roots feeding its status as a protection specialist. “Over recent years the brand has lost much of its lustre and has seen other companies forge ahead with new products and unique features. The question of ownership and commitment to the market has also caused many advisers to view Friends with a degree of circumspection. This appears to have been resolved with the recent acquisition of Axa’s protection business by Resolution and ongoing commitment to a combined company named Friends Life.”
Lakey observes that product designers are now shunning the easy option of adding conditions that hardly anybody has heard of and which are equally unlikely to result in a claim. He says: “FP has added one new condition and upgraded five existing conditions. The new condition is mastectomy for ductal carcinoma in situ. Claims are limited to the lower of 20 per cent of the sum assured or £15,000. During 2009 there were 920 such instances for females below age 50, which contrasts with 120 diagnoses of aplastic anaemia for the whole of the UK population. Therefore, this addition is very welcome.”
Discussing the enhancements made to the critical illness plan in more detail, Lakey adds that typical clinical symptoms such as chest pain are no longer required for a heart attack claim. “The surgical removal of a benign brain tumour is now included and coma claims no longer require a 96 hours qualifying period. Additionally, non-invasive surgery is no longer excluded for coronary artery by pass grafts or heart valve repair or replacement – a notable improvement given the increasing appetite for keyhole surgery.”
In Lakey’s view, the gauge of a good critical illness plan must be its comparative ability to successfully pay a claim when warranted and he feels that FP’s improvements have enhanced its proposition. “These improvements have moved FP up the league table from below average to above average, but they are not sufficient to threaten the top players in terms of quality of definitions.
“If quality is the differentiator then Bupa, Fortis, Legal & General and Axa will be the main competitors. Those advisers more focused on price will also look at Aviva and LV=,” he says.
Summing up, Lakey says: “The design and marketing of critical illness products is a permanent game of one-upmanship with providers seeking to outdo their competitors and looking to regain former glories when they are eventually overtaken. Plan improvements can only result in a better experience for policyholders and FP is commended for upgrading its definitions.”
Suitability to market: Good
Cover provided: Good
Adviser remuneration: Good