Critical IllnessJun 21 2019

LV changes critical illness policy

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LV changes critical illness policy

LV has changed its critical illness policy wording in a sign that insurers are becoming increasingly concerned about the cost of CI claims.

The protection provider changed the wording of its claims definitions today (June 21), and some advisers have raised concerns about the direction of CI in the market.

LV's new definitions will improve coverage for motor neurone disease and third degree burns, it has reduced the number of consumers that will be covered under its benign brain tumour policy - one of the conditions more commonly covered by the plan.

The policy has previously paid out for a benign brain tumour simply on a doctor’s diagnosis.

But from today, new policies taken out with LV will only cover the illness if it results in permanent symptoms or specified treatment such as full or partial surgical removal, radiotherapy or chemotherapy.

According to Alan Lakey, founder of CIExpert, the change means between 3 and 8 per cent of clients will not be able to claim on the policy anymore.

He said: "For years they have offered the best claim wording for benign brain tumour, paid on diagnosis, and now they have fallen back into the pack by insisting on treatment.

"LV has an excellent reputation in the income protection market but its CIC plan has drifted down the quality tables in recent years.

"I understand that enhancements are planned over the coming year. Hopefully these will restore it to past glories."

Adam Higgs, of the Financial Technology Research Centre, said LV’s previous definition was broader than any other provider's in the market, bar Guardian, but the change had brought the provider back in line with the rest of the market.

The chairman of the Protection Distributors Group, Alan Knowles, said LV’s move was a sign that insurers were becoming increasingly concerned about the cost of critical illness claims.

He said: "Although the move means that the definition now meets the norm, it does mean that some people will not be able to claim where they would have under and older policy.

"Of course this has been happening for years with critical illness policies, at one point you could claim for all cancers but now many most early stage cancers are excluded."

Mr Knowles said it was likely the industry would continue to see restrictions made on critical illness plans as medical science improves and risks of claims increase. 

He added: "The danger of course is that more wording means more complexity and more complexity means less people understanding what they have bought."

A spokesperson for LV said: "With the critical illness market constantly evolving and with ever-improving diagnostic techniques, we’ve reviewed and updated our critical illness definitions for benign brain tumour.