Serious illness cover beats CI, PruProtect finds
Severity-based cover is more popular with consumers than critical illness because clients value quality over price, research from PruProtect has suggested.
The independent survey of 652 people, who either hold or are considering taking out life or critical illness cover, claimed that twice as many preferred serious illness cover to traditional critical illness cover.
Respondents cited payment of claims, rather than cheap premiums, as the most important factor in taking out a policy, with 87 per cent saying that the likelihood of payout was the most important aspect of protection.
Many respondents said the ability to make multiple claims, coverage of more illnesses and a greater chance of receiving a payout were important factors.
Justin Taurog, marketing and distribution director for PruProtect, said: “Serious illness cover continues to provide the backbone of our growth in the UK market and severity-based cover provides the best value for money for consumers.”
However, Alan Lakey, partner for Hertfordshire-based Highclere Financial Services, said PruProtect’s serious illness plans were so different from other CI plans that it was impossible to compare them.
He said: “When you look at the main conditions people suffer from, such as cancer, Pru doesn’t pay out fully, it has a two-stage process, paying out 50 per cent on stage 1 cancer and 100 per cent on the more serious stage two, so you have to place a value on being covered on more conditions by the Pru, but the possibility of being paid a lower sum.”
He said the serious illness plans were innovative, but complex, and only suitable for personal cover, rather than to protect a mortgage.
Mr Lakey added: “The Pru plan is difficult to understand and my fear is how to describe it adequately enough to customers to protect myself as an adviser.”