12 - PROTECTION INSIGHT
PROTECTION – are you looking past the price?
Buying protection insurance shouldn’t just be about cost. We look at where the real added value can be found. Due to the inherent complexity of protection products, it can often be difficult to compare two products directly. The temptation, therefore, is to select the cheaper option. However, as the saying goes, ‘caveat emptor’, or ‘buyer beware’. Because there’s likely to be a reason why one is cheaper than the other, due to an absence of value. Of the 20 or so providers in the protection space who offer critical illness cover, it’s true that most cover a similar number of conditions, with both full and partial payout conditions, and categorise conditions under “ABI+”. But despite all this, two plans covering similar conditions may still have a wide variation in the level of cover they provide. So it’s important to really understand the differences in the cover you’re recommending and the implications these can have on clients. The devil is in the detail Similarly, you need to make sure that, as far as possible, your clients fully understand what they’re buying. After all, just because two policies cover the same condition, doesn’t mean they’ll pay out at the same time, for example. Take prostate cancer: many protection providers cover it at a low grade. However, most will only pay out on surgical removal of the prostate or where there has been some other form of treatment. Now, the recommended treatment for low grade prostate cancer, according to the NICE guidelines, is in fact to adopt active surveillance. So removal of the prostate is unlikely to be recommended by doctors at this stage of the disease, hence no chance of a payout – in some cases for years, in other cases ever – from their Critical Illness policy. Angioplasty is another typical example of where the devil is in the detail. Most
Critical Illness providers will only pay out when two or more arteries or the left main stem artery of the heart have been operated on. But when you take into account that over 80% of angioplasties are only operated on one artery, many people are left disappointed and empty-handed as soon as they try to claim. It’s a similar story with heart attacks. Most insurers insist on a characteristic rise in troponins as well as electrocardiographic changes, another form of proof required for a successful claim, which for a lot of people can be a difficult threshold to reach. The net result of all this can be that advisers progressively face a growing sense of cynicism from their clients, in cases where their policy doesn’t pay out as expected. Not all cover is the same But there are signs that some providers are starting to do more for clients. Vitality is one of a handful of providers in the market to cover low grade prostate cancer, with no requirement for treatment. This is in line with customer expectations, where three quarters expect to be covered for low grade prostate cancer regardless of required treatment 1 . Paying out at early stages of illness not only helps to ensure expectations are better met, it gives vital peace of mind to both clients and advisers. In the case of Vitality Comprehensive Serious Illness Cover, it makes an initial payment for an angioplasty no matter how many vessels or which ones are operated on, with an increased payment once two or more or the left main stems are operated on. Again this is in line with customer expectations with 8 in 10 people expecting a payout for angioplasty on one artery 1 . Vitality will also pay out on diagnosis of a heart attack, with no requirement for proof via electrocardiographic changes. What’s more, Vitality are the only major provider to do this. Earlier payments Unlike most policies, which are designed to provide cover for a one-off payment or a high degree of severity – meaning many people having to suffer for prolonged periods without any financial assistance
– Vitality’s Serious Illness Cover takes a severity-based approach, as well as covering more conditions at earlier stages. This means that payouts are according to the impact an illness has, which is better aligned to the needs of today. After all, medical advances have improved the way illnesses are treated and surgical procedures have become less invasive, which means that conditions today are less critical than they once were. This is in line with doctor and customer expectations, with over seventy percent of customers 1 and doctors 2 seeing it as very important that payments under a critical illness policy pay out on severity. This means your clients can get access to their cover when they first face an illness, with cover continuing in the event that their illness progresses or they get another illness. A good example of this is rheumatoid arthritis. Vitality covers this on diagnosis and then increases the payment as the condition deteriorates, whereas other providers require a significant impact before making a payment. In addition, if your client wants the security of a full payout for conditions that get a full payout under a critical illness cover, they can select Serious Illness Cover Booster for an extra cost. Think wider Next time you are advising one of your clients on a protection policy, there are several elements in terms of value to consider. In particular the breadth of coverage and making sure that cover is in place for lower severity as well as higher severity illnesses are particularly important. The devil really is in the detail. Vitality prides itself on its wide range of coverage and the definitions which increase the chances of payout. 1 Independent research of 800 policyholders or prospective policyholders commissioned by Vitality in March 2018 2 Independent research of 150 doctors commissioned by Vitality in March 2018 Aug 2019. This article’s view is based on the law, practices and conditions as at the day of publication. While we have made every effort to ensure they are accurate, we accept no responsibility for our interpretation or any future changes.
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