Wednesday, 17 April 2013

Critical Illness insurance - critical improvements?

As well as this blog and my regular pieces at Talk Health (www.talkhealthpartnership.com) I also write regular op-ed pieces for Premier Choice Healthcare covering health and protection insurance issues. I've been  doing this for several months now and have a decent 'back catalogue' of pieces so I thought it might be useful on occasion to reproduce the articles here.

Heree's the first one, called "Critical Illness insurance - critical improvements?" Covering the state of play of the Critical Illness market. Enjoy !


Protecting the financial future for your family is vital and following the diagnosis of a major health problem, critical illness (CI) insurance is one of the most logical options that can enable you to cope with the trials and tribulations that will clearly follow such a diagnosis. But this type of insurance is probably the least purchased and most misunderstood class of protection cover.
Essentially this type of plan is designed to pay out a lump sum following the diagnosis of one of a list of serious illnesses or medical conditions. Payment will depend on the policy holder surviving a set time period following diagnosis (typically 28 days).
The premise clearly sounds reasonable, straightforward and in principle a good purchase for the consumer.
However, since CI plans launched into the UK in the 1980's their value has been brought into question. Over time the headline range of conditions covered by CI has grown (to around 30 conditions with some insurers), however as medical science has advanced, conditions once viewed as serious or even terminal are now sometimes cured easily or managed as chronic conditions. Faced with increasing claims costs for conditions no longer deemed critical or even life threatening, insurers have needed to constantly revise and reduce their claims payments by adding restrictions to the type and severity of conditions covered. In turn this has lead to a view generally that insurers have 'changed the goal posts' when paying claims. So the perception is created that CI plans are unlikely to pay out and are therefore expensive for what they provide.
Simply put, what might have been a straightforward claim 10 or 15 years ago may not now result in a successful pay out al all for a policy holder.
In the last several years there has been a drive from the Association of British Insurers (ABI) for those insurance businesses that write CI policies to offer wider and clearer definitions in an attempt to drive more perceived value for purchasers of CI. It is after all a valuable benefit that can be a godsend in certain situations.
All plans should now cover a set of seven core conditions including: cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. In addition they should also pay out if the policy holder is permanently disabled following an injury or illness.
The ABI has offered additional guidance on a range of conditions where successful claims may not be likely such as non invasive skin cancers, less advanced prostate cancers and also where certain policy restrictions may sit e.g. on a range of cardiac conditions. All so that prospective purchasers of this cover understand from the outset what is and isn't covered.
More recently (in 2011) there have been clarifications to the rules around payouts for policy holders with total permanent disability claims.
In short, the industry and regulators seem to be making a more determined effort to raise standards and present critical illness plans as offering good value for consumers - i.e. they will pay out when the policy holder needs it the most!
This is still a complex area of consumer advice and Premier Choice Healthcare as a specialist health and protection intermediary can help you navigate the plans available and come up with the right cover for you and your family.
Read the rest of my PCH articles at Premier Choice 'Latest News'

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