Critical illness plans have evolved over the past 25 years. Initially there was a
condition race where insurers sought to leapfrog their competitors by adding ever
greater numbers of illnesses.
Changes have also been made to definitions as insurers have tried to ‘future proof’
the wordings to reduce the risk of advances in diagnostic techniques causing an unwelcome
increase in claims.
Definition wording changes in 2003/04 served to weaken the cancer definition. This
suggests that pre-2004 plans offer superior cover to the current crop.
Nothing is so simple, newer style variations, may include additional cover for Mastectomy,
Early Stage Prostate Cancer, Third Degree Burns and Loss of One Limb, so a detailed
assessment is required.
Insurers (ABI) define a Critical Illness Plan as:
“Critical Illness cover means cover which pays out on diagnosis of a listed critical
illness. The list of illnesses must include cancer, heart attack and stroke.”
How does my old policy compare?
68% of consumers surveyed believed that they could claim for any illness that meant they could not work
55% did not understand what is meant by full medical disclosure
The insurance industry uses statistics to set their rates and these are based around
the likelihood of somebody suffering from one of the conditions covered. The prime
statistical figures relate to incidence. This is a figure for the number of individuals
who have suffered from a condition in a particular year.
Another descriptive term is prevalence. This means the number of people suffering
at any given time from one of the conditions. Incidence is of greater importance
when we assess the worth of having a particular condition included.
The difference is best explained by reference to Multiple Sclerosis. In the UK around
100,000 people are currently suffering from MS and this is the prevalence figure.
In a typical year 2,600 individuals between the ages of 25-65 are diagnosed with
MS and this is the incidence figure.
The relevant statistical figures are those of incidence. This is a figure for the
numbers of individuals who are first diagnosed with a condition in a particular year.
What conditions will be most likely to occur
CIExpert is an independent organisation that creates in depth analysis to assist
advisers in choosing the best policy for their clients.
We also seek to provide guidance and education to consumers in understanding the
value and choice of Critical Illness Insurance.
We pride ourselves on maintaining an objective view.
Consumer Guide To Critical Illness Insurance
Policies are constantly changing
Critical illness plans have been available in the UK for over 25 years and the one
constant is that they keep undergoing change. Conditions are added and sometimes
they are taken away.
Frequently they are adjusted and just when you have become accustomed to them they
alter yet again.
The ABI operates a working party which determines model wordings for those conditions
offered by at least 75% of its members.
These are reviewed every three years and wordings are frequently modified and fine-tuned
to reflect advances in medical science or to better describe the claim wording.
No surprise that consumers and even some advisers do not understand them
The industry, and particularly the insurers who market these plans, have an obligation
to explain using non-ambiguous phraseology, an obligation to design plans which clarify
rather than confuse and an obligation to simplify whenever possible.
However there are many examples of design found wanting, for example:
Having Dementia, Pre-senile dementia and Alzheimer’s disease shown as separate conditions
when they are essentially similar with identical claim wordings
Another is having Emphysema and Chronic Lung Disease as distinct conditions as is
including Liver Failure when it’s almost certainly caught by Major OrganTransplant
Our services to Advisers assist them in understanding Condition Definitions