Critical IllnessOct 30 2018

Isn’t it time we all spoke the same language when it comes to CIC?

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Isn’t it time we all spoke the same language when it comes to CIC?
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The UK protection gap is currently estimated to be around £2.4trn , according to reinsurer Swiss Re, and that includes a lot of people whose mortgages are not protected. 

As a result, if a borrower is unable to work because of a critical illness, they can quickly run into difficulties – and their families can face real hardship. 

Understanding the need for critical illness cover (CIC) is not the problem, though.

When Legal & General surveyed more than 5,000 people for its 'Deadline to the Breadline' report in 2016, close to half (45 per cent) said they knew someone who had suffered a serious illness or injury. And many of these families will have little savings to fall back on, if any.  

There are other good reasons for taking out critical illness cover too: payout rates on these policies are now over 90 per cent, according to the ABI, and the breadth of coverage has significantly increased over the years.

So why is market penetration for critical illness insurance just 12 per cent?

There have already been efforts to promote the use of plain English in product literature and avoid medical jargon where possible – but we need to continue pushing for this.

The answer may lie in the fact that many people still find CIC too complex. In fact, many people even seem to find the name confusing.

When it was first introduced to the UK, it was called Dread Disease cover and these policies used to cover only five core illnesses – cancer, heart attack, stroke, kidney failure and coronary heart bypass-graft.

The product then evolved and covered 12 illnesses, and as a result, people started calling it critical illness cover instead.

However, now CIC can cover many more illnesses. Legal & General's own policy, CIC Extra, includes some 95 conditions.

Covering more conditions is a good thing, but a large number of those included don’t reflect what many people think of when they hear the word ‘critical’ and thus may be unaware that they could make a claim. Unless the whole industry gets together to change the name again, which it won’t, we will need to do the best we can to simplify these products – but how?

There have already been efforts to promote the use of plain English in product literature and avoid medical jargon where possible – but we need to continue pushing for this. And some consistency would be helpful, too.

We don’t just need simple terms in policy wording to help consumers understand what they’re buying; we need the same terms in different policies, so that buyers can compare CIC products more easily and we then need to remind customers on a regular basis what cover they have. 

No one insurer will be able to make these improvements on its own, of course.

A complete overhaul of CIC would probably require an industry-wide agreement on plain terms for cover, as well as some consistency in the cover provided. And we’re unlikely to get industry-wide consensus in these areas any time soon. 

So, the question is, what can we do – right now – to help provide the clarity and comparability that buyers need? The answer is to support our advisers.

In many ways, CIC is in fact a complicated product – that is why customers need an adviser to help them through what can feel like a minefield when it comes to choosing the right policy.

Advisers can add enormous value here by regularly reminding clients what they have in terms of cover and reminding them that they are, or would like to be, the first port of call if the customer needs to consider updating their policy or their health circumstances change.

Advisers also play a crucial role in offering the simplification and interpretation of CIC policies that customers need when choosing the best policy for them.

Primarily, that will involve helping customers review and translate policy wording, so they can make informed choices and comparisons between products. 

To do this, advisers will need support from insurers, though – largely in the form of information and education.

As a provider we would like to agree with our adviser partners how best we can all help keep our policyholders and clients aware of the benefits of the cover they have so that if “life happens” to them, together we can help customers make the most of the cover they have. 

If we, as an industry, stay true to this commitment, we can help advisers to simplify CIC for customers right now – and ensure that they aren’t discouraged from getting the vital protection they need.

Craig Brown is director, intermediary at Legal & General