Anyone affected by cancer or other forms of serious illness will know the devastating effect they can have on a household, with the financial implications as great as the emotional strain involved.
But the products aimed at alleviating such problems have not always made headway with the public, nor advisers.
On top of this, the industry that is seeking to engage consumers on this front has, in the past, been dogged by issues of its own.
The providers of critical illness (CI) products, which pay a lump sum if a customer is diagnosed with a relevant condition, have been met with a series of gripes over the years. The offerings are not easy to understand, and trust in the sector is weakened at times when companies fail to pay out in a suitable manner. Often, firms can appear preoccupied with how many conditions they appear to cover, rather than the consumer outcome when the worst happens.
This has already put some intermediaries off. Ian Sawyer, managing director of advice firm Assured Futures, believes such failings mean CI should be “marginalised or removed” in favour of income protection, which he views as a superior product.
“I sometimes think the industry is a little bit obsessed with CI and the ever-changing list of illnesses and definitions that are becoming mind-boggling,” he explains.
“I am bemused why providers don’t start from the default position of life [insurance] with income protection rather than life with CI. If a life and income protection hybrid product were more readily available and quotable by advisers, there’s a chance that the right product might be sold more often.”
None of this is new. According to Alan Lakey, a financial adviser who also runs policy comparison service CIExpert, he and other protection specialists have been “talking about the same issues for the past five years”.
But the CI space, normally a stranger to major upheaval, has witnessed several significant developments in the past year. As such, insiders believe the industry is moving in a new direction, which could benefit insurers, their customers and advisers.
Swiss Re’s latest ‘Term and health watch’ report points to a good 2017 for protection providers. Sales of all protection products were up by 11.6 per cent compared with 2016. Individual CI cover has led this rise, with 526,123 total new sales, representing an increase of 21.1 per cent from 2016’s CI sales.
Respondents to the report highlighted innovation as a key theme of 2017. Swiss Re noted a slew of product changes, “too numerous to list”, and a broader sense that the sector had moved towards “greater customer-centricity, choice and access”.
There were some clear market leaders by sales in 2017, according to Swiss Re’s research. Legal & General sold 131,515 new CI policies, followed by Aviva’s 126,824. The gap between these two and the third-place provider Vitality Life’s 52,375 is significant.
But those on the ground have noted other changes on the horizon. A new firm has entered the market with a notably different approach to the established players, and developments over the past 12 months have already moved providers in a more customer-friendly direction.