However, they are considered a simple solution to the problem because at the point of claim the agreed benefit is paid without any financial assessment as long as the client is working, explains Higgs.
“Two examples of this are Aviva’s Living Costs Protection and British Friendly’s Breathing Space,” he adds. “More recently, LV introduced their Mortgage and Rent Cover, but this works slightly differently as it will only cover a person’s mortgage or rent, whereas Aviva and British Friendly do not stipulate what the benefit is to be used for.”
Simple critical illness cover
Experts tend to agree that the critical illness market has become a bit of a minefield for advisers, with many insurers now offering multiple products based on a range of factors. For example, whether to choose core or enhanced critical illness cover for the life assured, whether to include children’s cover or not and, if so, whether that should be enhanced or core children’s cover.
In other words, there is a lot for advisers to navigate already, says Higgs.
“In terms of simple products, AIG’s Key3 plan stands out as it only covers the three most commonly claimed conditions: stage 1-4 cancer, heart attack and stroke.
"Across many insurers, these conditions will account for between 80 per cent and 90 per cent of the claims they pay,” he adds.
“A big issue for advisers, however, is that the product often does not come in at 80 per cent to 90 per cent of the cost of the core critical illness plans in the market. And, where it does, the price differential can be measured in small change rather than notes, unless particularly high sums assured are involved.”
Lakey says: “AIG’s Key3, which covers any malignant cancer (bar early-stage prostate cancer), heart attack and stroke, attempts to offer a simpler option – but how many clients would willingly accept the loss of multiple sclerosis, Parkinson’s disease, benign brain tumour and coronary artery by-pass surgery cover as well as a host of less advanced cancers just to save a few quid?
“I would completely re-design the brochures to reduce verbiage, avoid unnecessary duplication and make the reading experience interesting as opposed to boring and drawn out. Most of the advisers who subscribe to CIExpert tell us that they use the ’simpler’ and cheaper plans as the base from which they can explain the value of the more comprehensive options.”
Higgs adds: “Although the client is far less likely to claim on any of those wider conditions, it is possibly one of the easier up-sells an adviser can make, by simply stating: 'For a few pennies more you could be covered for an extra 37 conditions'."
