Whether it is a life assurance policy or income protection, few policyholders ever want to have to use their cover. But, as this can leave engagement levels low, insurers are introducing a variety of added value benefits that can be used from policy inception.
Although these extras are designed to complement the cover the policyholder has taken out, they can take many different forms. For example, while helplines and medical second opinion services are commonplace, Vitality Life rewards its policyholders with benefits that include discounted gym membership, cinema tickets and free coffee.
Extending cover in this way is seen as a positive step. “I am in favour of these additional benefits,” says Ben Heffer, insight analyst for life and protection at Defaqto. “Insurance should be about more than paying money to the policyholder if something goes wrong. These services can complement the cover, for example a claim support service; or enable the policyholder to access advice and information, for example about legal or relationship issues that may have nothing to do with the cover.”
These extras can also help to swing an adviser’s recommendation. Rob Harvey, learning and development manager at Drewberry, says the suitability of the cover and the price are primary factors when recommending a policy; but where two insurers are fairly equal, the availability of these extra services can help. “Some clients do just go on price and do not care about the extras, but others see the value and will pick a policy with these additional benefits, even if it is slightly more expensive,” he explains.
Additional services
Although extras are cropping up across more and more protection policies, some stand out more than others. For example, Mr Harvey says that Vitality offers the most extensive package of extras but adds that AIG, Aviva, Friends Life and Royal London all deserve recognition for the benefits they offer.
For instance, Royal London offers its protection policyholders its Helping Hand service. This gives them and their family members access to a personal nurse adviser who can offer emotional and practical support including access to counselling, therapies and specialist equipment. As examples, members can get specialist speech and language therapy, which may be necessary after a stroke, or help with physiotherapy, if they are recovering from an accident or injury.
Friends Life also offers an extensive range of extras. In addition to a medical helpline, second opinion service and counselling, it has added a couple of extras that policyholders can choose to pay to include. These are its fracture cover, which costs £2 a month and pays out up to £2,100 if the policyholder suffers one of 18 different breaks in a 12-month period, and its global treatment cover, which costs £4 a month, and covers treatment overseas if they are diagnosed with a serious illness and require one of six medical procedures, including cancer treatment and neurosurgery.
Many of the services offered by the insurers are provided by the same third parties. For example, Best Doctors is used on both AIG’s and Friend’s Life products, and Red Arc provides its personal nurse adviser service to Royal London and to Aviva. There can be subtle, but important, differences too. While Aviva’s critical illness insurance policyholders can access the Red Arc service at the point of claim, Royal London’s can use it whether or not they need to make a claim.
Insurer benefit
While the value of these services can be significant to policyholders who use them, insurers’ motives for adding them are not entirely altruistic. “Encouraging policyholders to use these services can potentially reduce the risk of a claim,” says Harvey. “If someone is having mental health issues, being able to access counselling at this early stage can prevent them becoming an income protection claim altogether and may also reduce the amount of treatment they need.”
Similarly, where a policy provides access to health information and incentives that can help someone get fitter, the insurer will benefit from lower claims incidence as a result of improvements to policyholder risk profile.
Vitality Life is a good example of this. It offers a range of benefits designed to help policyholders improve their health. These include half-price health screening and tracking devices, free smoking cessation courses and discounted Weight Watchers programmes. Policyholders who select its Vitality Optimiser or Vitality Plus options can obtain reduced price gym membership and get money off bicycles.
In addition, with its Vitality Optimiser, policyholders who look after their health can even control the rate at which their premiums increase. For example, policyholders on bronze or silver status will see their premium increase by 2 per cent and 1 per cent respectively, while those on gold status freeze their premiums and anyone lucky enough to achieve platinum status will see their premiums reduce by 1 per cent.
Raising awareness
With policyholders, insurers and advisers standing to gain from the addition of these services, Mike Aldridge, innovation director at London & Country Mortgages, believes more should be done to raise awareness. “These services should be flagged up every year in annual statements to ensure policyholders know they are available,” he says. “Sometimes I think the only reason insurers can afford to offer these services is because awareness, and therefore usage, is low.”
Although annual statements for protection products have been mooted for several years, with the industry unable to agree a format, some firms, including Aldridge’s, are building their own. “Some advisers believe that if you remind clients they have cover they will cancel, but we see it as the right thing to do,” he adds. “Lives change and a client might want to take out extra cover or to use these services.”
As awareness of these types of benefits increases, the question of whether they remain free or are priced separately is likely to be raised. Friends Life has already dipped a toe in this area with its fracture cover and global treatment options, and many insurers already give policyholders the option to pay for cover extensions. For example AIG charges extra for waiver of premium; total permanent disability on its critical illness cover; and total disability, which provides some income protection cover on its critical illness cover.
But, with sales of protection still lacklustre – Swiss Re reported an increase in sales of just 0.9 per cent in 2015 – adding these additional benefits to products may help to make them more attractive to a wider market.
Table 1: Complementary benefits offered to policyholders
| Insurer | Additional benefits |
| AIG | – Best Doctors – Winston’s Wish – a bereavement service for children |
| Aviva | All products – Aviva Advantages – special offers and discounts from high street retailers – Get Active – gym membership discount Life– Co-op Legal Services – Co-op Bereavement Advice Service – Grief Encounter – counselling for children whose parents have died Critical illness– RedArc support services at point of claim |
| Friends Life | – Bupa Healthline – Best Doctors – Counselling and carer support services – Global Treatment policy – an optional £4 a month per insured member for access to medical expertise and treatment overseas – Fracture cover – an optional £2 a month for a lump sum of up to £2,100 in the event of one of 18 specified fractures |
| Royal London | – RedArc support through its Helping Hand service at any point |
| Vitality | A range of benefits including: – Discounted health checks and screenings – Discounts on fitness equipment including half price trainers and fitness trackers – Up to 75 per cent off spa breaks – Free smoking cessation course – 12 months’ free Weight Watchers – 10% cash back at Lloyds Pharmacy By paying an additional monthly fee of £3.30 for Vitality Optimiser, and £4.50 for Vitality Plus, members receive enhanced rewards including discounted Eurostar tickets, a free weekly Starbucks and a cinema ticket and up to 50 per cent off bikes at Evans Cycles |
