Design better protection products: Sofat
Anna Sofat, managing director of London-based Addidi Wealth, said: “It is a pity the insurance industry has not come up with a protection product that could serve as a halfway house between critical illness and income protection.
”I have a client who was diagnosed with cancer and had critical illness cover, but who couldn’t claim because she continued working while undergoing cancer treatment because she ran her own business and felt under pressure to do so.”
Ms Sofat said if there were a product which paid out, say, £25,000-£30,000 a year for two to three years, in the event of diagnosis of a critical illness, this would be much more useful to the client, than the large one-off lump sum payable by a critical illness policy and a lot cheaper.
She added: “The protection industry needs to move with the times and devise a product that takes medical advances into account, and that people are not only surviving longer, but recovering more quickly. If they recover within six months, they often can’t claim on either their income protection or critical illness policies.”
However, Andy Milburn, head of marketing at Ageas Protect, said: “Real life cover is a hybrid product that was designed to do exactly this, to be a half-way house. Was it a good idea? Yes. Has it worked as well as it should in the intermediary market? Yes, but not as well as we would have liked it to.
“Why is this? We have found that intermediaries want a product design that is easily comparable with others, so real life cover has suffered in that respect, because it’s too different.”
Mr Milburn said that similar, newer products have also suffered from this as it was harder for intermediaries to recommend a product design that was far different to what they were used to explaining, and which was not easily comparable to other products available.
He added: “The portals advisers use play a role in this too. Intermediaries want to see the product quotations alongside similar products when they request a quote for a client.
“Different product designs can’t slot into the portal process as easily as mainstream products do. I’m not for one minute criticising intermediaries or real life cover.
“But the fact is that hybrid type products are harder to place in the UK intermediary market than more mainstream product designs have been.”