Critical Illness  

Simplification is the 'future of CI'

Simplification is the 'future of CI'

Critical illness policies that have simple illness definitions could become more commonplace as advisers say complicated policy terms can be off-putting for clients.

Legal & General announced today (July 29) a shake up of its CI policy which now offers a simplified list of conditions aimed to make CI products easier for advisers and consumers to understand.

For example, ‘open heart surgery’ and ‘coronary artery by-pass grafts’ now fall under one condition of ‘specified heart surgery’ while two separate ‘drug resistant epilepsy’ conditions have been merged into one.

‘Kennedy’s disease’ is incorporated within the Motor Neurone Disease definition and ‘traumatic brain injury’ is included within the brain damage condition.

The three conditions resulting in a loss of use of a hand or foot — entire loss, loss of use or paralysis — now fall under one section.

On top of this, 13 cancer conditions have been replaced with one ‘catch all’ definition.

According to L&G, the move comes after research by the provider showed 81 per cent of intermediaries said they would prefer similar conditions to be merged together where it made sense.

Craig Brown, director of intermediary at L&G, said: “This provides advisers with more comprehensive cover that is easier to understand. We hope it will also provide more certainty to clients and consumers.

“It’s providing simplicity without eroding the cover — it’s getting a balance between keeping it simple, comprehensive and affordable for the consumer.”

Mr Brown thought the days of providers adding more and more complex conditions to their CI policies were past and the goal for insurers now was to simplify the comprehensive cover they provided.

He said: “It’s a real step in the right direction. Advisers want products that are relevant to them and their clients and want them to be easy to understand at a good price.”

Alan Lakey, director at CIExpert, agreed. He said: “A lot of advisers give up dealing with CI conditions because it is too complex — you don’t want to not be able to explain parts of a policy to a client.”

Mr Lakey thought simplifying CI conditions would be the “future for CI” and urged providers to “look at their definitions and cut them down”.

He hoped this was the commencement of a movement CIExpert had argued was the only means of pushing the product forward.

Adam Higgs, head of research at Protection Guru, added L&G's new model increased the likelihood of a payout for consumers.

He said: “The latest upgrades from L&G combine to provide higher pay-outs with broader coverage and more simplicity to their wordings.

“The widening of their pulmonary hypertension definition to include all forms of pulmonary hypertension - including secondary causes from lung and heart disease - is market leading. 

“Overall the changes put L&G back into a very strong position in both the comprehensive and cost-effective ends of the market.”