LV= reaps reward for focusing attention on critical illness

The overhaul, which began at the beginning of last year after consultation with medical officers, reinsurers, customers, and advisers, has resulted in a programme of increases to the number of conditions covered and partial payments made, as well as to an extension of benefits offered.

And it’s a move that has been very well received in the marketplace with LV= enjoying 50 per cent growth in 2011 and being 20 per cent up already this year, according to Chris McNab, the company’s product manager for Critical Illness.

“It’s a dynamic market but we’ve still managed to maintain our momentum into 2012,” he says. “We have been offering CI cover for over 25 years but it’s really become a major focus for us over the last few years and advisers are now recognising our expertise in this area.”

One of the reasons behind the changes has been continued medical advances and the fact that the chances of surviving a major illness are improving. While this is positive, it does require advisers to take into account the physical, financial and emotional consequences for individuals.

“In many cases these can be life-altering situations so advisers will want to be confident that the critical illness cover they recommended to clients will be flexible enough to adapt in line with their changing lifestyles, as well as covering the right number and seriousness of conditions,” he says.

So let’s look at some of these latest changes in more detail. As well as increasing the number of conditions covered to 48, it has also upped the scope of additional partial payments offered to seven - including some of the most common conditions that advisers’ clients may face during their lifetime.

Sixteen of the conditions covered offer greater cover than that defined by the ABI, while LV= continues to have zero standard exclusions. This means that advisers benefit from their clients being paid out faster, points out Mr McNab.

“An example is that the standard ABI definition for Multiple Sclerosis declares that ‘symptoms must have persisted for a continuous period of at least 6 months’, but we’ve reduced this to three months, which means end clients will receive their payments much quicker.”

It’s a move that has been welcomed. “It’s all about offering comprehensive cover for our customers that provides value for money,” he adds, “partial payments offer much needed financial support for a period of time.”

He cites the fact that the cover previously offered on its Mastectomy benefit has been increased – in response to medical advances – and this is particularly relevant given the fact that 4,650 women are diagnosed with Ductal Carcinoma in-Situ each year in the UK.

“We now cover less invasive forms of treatment such as Lumpectomy as a result of the changes made,” he adds. “In addition, we’ll continue to offer cover for Low Grade prostate Cancer with one of the most competitive partial payments in the market.”

It’s worth noting at this point that the partial payments granted by LV= will not affect a client’s level of cover – in contrast to the situation from some other providers where reductions can potentially leave clients with a short fall against the reason they initially took out the policy.

In fact, if you add all the partial payments, children’s cover and the full conditions together, an adviser’s client could actually receive more than 200 per cent of the original sum assured. When this is set in context with all the changes made, it looks a pretty compelling proposition.

Mr McNab believes the changes have resulted in a market leading proposition for advisers and their clients.

“It offers a great level of cover for customers – yet still remains competitively priced,” he says. “That is exactly what people want: comprehensive policies that are value for money. We want to ensure that the cover helps protect an adviser’s clients against a wider range of conditions that could equally affect and impact their lives, and not just the conditions that will be life threatening.”

I would imagine the last thing an adviser would want to do is recommend their clients pay through the nose for something that may not deliver as expected when required. Doing thorough research on a provider – and their past history – should, therefore, be an essential part of the process for all intermediaries.

“Claims payments need to be a big consideration for advisers, although I’m not sure this is always the case,” he says. “Customers want a comprehensive and cost effective product that will give them money if needed. At the end of the day it’s a promise to pay out.”

This is where LV= scores highly. It is proud of its claims numbers and openly publishes them as part of its overall statistics. “We pride ourselves on delivering a very high level of service to both adviser and clients, and have a distinguished track record of paying claims,” he adds.

It also has the benefit of being a mutual. “This means that we’re not answerable to shareholders, but here for the sole purpose of our members,” he explains. “This gives us a bit more freedom and enables us to offer added extras such as access to a free medical helpline, legal advice, discounts on products, and the chance for members to attend company meetings and vote on how it is run.”

Looking to the future, Mr McNab expects the gender regulatory changes – that have come about as a result of the EU ruling – could affect the market. This might involve some more niche propositions being launched by companies wishing to go down that route.

“I don’t think the gender changes have been particularly well thought out and in my opinion paying a price that reflects the risk you bring is fairer than a pool for risks that aren’t necessarily a risk to your gender,” he says. “Outside of gender, I also think there will be a lot more focus on partial payments but other than that the core product will remain the same.”

In addition, Mr McNab feels that providers can do more in the way of offering advisers adequate training and advice in order to help their clients make the right decision about protection, and be comfortable with the chosen product solution.

“Anything we can do to create awareness and explain about the products to clients should be considered,” he adds. “There’s a lot of focus on products such as life insurance but we really need more on both critical illness and income protection policies.”

It’s an accepted fact that all types of protection are undersold in the UK and it’s up to everyone involved in the industry to encourage customers to guard against the unthinkable, he says. To ensure that advisers are comfortable recommending such products is an obvious first step.

“Critical illness cover has always been important for advisers and most are certainly aware of the benefits it can provide but there’s always room for improvement,” he adds. “They need to be kept aware of how the market is developing and to be helped in their decision making process.”

As far as LV= is concerned, Mr McNab highlights the combination of the company’s long, distinguished history, it’s recent overhaul of its critical illness product, and the ways in which it has managed to combine strong policies with cost effectiveness, as benefits of its approach.

“There is obviously a balance between offering a comprehensive policy and making it affordable but we believe we have managed to achieve this,” he says. “We have developed a market leading product which advisers can have confidence in selling over the coming years.”