Aviva, the UK's largest insurer, plans to restore adviser confidence in the product.
They've enhanced a number of features of their CI cover and through education to advisers and clients intend to improve understanding of CI policies and the conditions covered.
CI providers have done a lot of work over recent years to improve payouts. This has resulted in the successful claims rate increasing from around 80% a couple of years ago to around 90% today.∗
Aviva paid out 744 CI claims during the six months to end of June 2009, totalling almost £60 million to people in need, with the average payment at just over £80,000.
Michael Whyte, chief underwriter for Aviva, said:
"Critical illness and life policies are the type of policy nobody wishes to need to claim against yet evidence shows that these are vitally important policies that can support families and secure their financial well-being during the worst of times. We are proud that we can make a difference to these families when they need it most, removing financial worries so that they can focus on what is most important to them."
15% of UK adults have CI cover∗ which has become popular as surviving claimants can use the money to help pay off a mortgage, pay for treatment, make changes to the home, pay for living expenses or even take a holiday to help recover from the illness.
Richard Verdin, Director of Protection at Aviva comments on their recently enhanced critical illness cover:
"In reviewing the market and considering how best to enhance our cover, our philosophy has been to only add conditions which add value and increase the scope of cover, meaning we haven't added conditions which are covered elsewhere.
By adopting these principles, our aim is to:
• Offer a product with an appropriate balance of conditions, simplicity and price.
• Give customers and financial advisers a clear statement of benefits.
• Reduce claims not paid due to criteria not met."
The Enhancements
For some advisers and their clients Aviva's improved critical illness cover may present an appealing opportunity:
• Increased the maximum sum assured from £500k to £2m
A £2million maximum sum assured means customers requiring this greater level of cover, particularly for Business Protection, can now source cover from Aviva.
• Increased the maximum term from 25-40 years
• Increased the maximum age to 75 years
These enhancements are consistent with what's happening in the market with mortgages being taken out over longer periods of time. Increasing the maximum term means potential customers can take CI to cover the duration of their mortgage.
• Increased the number of conditions covered from 26-31
The new conditions added will provide clients with greater peace of mind that their policy provides them with more comprehensive cover
• Improved 11 existing conditions
The definitions of some existing conditions have been improved to provide a greater level of cover and in some cases exceed the ABI industry standard definition.
• Increased CI cover for children
Level of cover for children has been doubled from £10k to £20k or 50% of the sum assured, whichever is the less.
For more information about critical illness cover from Aviva, speak to your Aviva
Consultant or visit aviva.co.uk/adviser/site/public/news/criticalillness.
PT07024 09/2009.
∗ Mintel Report ‘Critical Illness Cover, Finance Intelligence.' February 2009.
