The next innovation in protection insurance was critical illness cover, originally known as Dread Disease cover, launched in 1983 in South Africa by Dr. Marius Barnard. This sort of cover is also known as trauma insurance, serious illness insurance and living assurance, depending on provider and location.
Critical illness cover typically involves a lump-sum payment after diagnosis of one of a list of specific illnesses of stated severity. If you get the wrong illness or it is not serious enough, then there is no pay out. If you die before the end of the waiting period, often 14 days, then there will not be a pay out either, although most critical illnesses are combined with a life policy, so that pays out instead. Most policies are sold on an “accelerated” basis, so you would get only one pay out of life or critical illness, depending on what got you first!
In the developed world, death before retirement age is unlikely, which is why life insurance is cheap, only pennies per month per thousand of sum assured. Being diagnosed with a critical illness is much more likely, very approximately, 12 times more likely, so the premiums are commensurately much higher.
In the UK, critical illness coverage and severity definitions usually follow the ABI, (Association of British Insurers), structure, so policies are described as ABI or ABI+, giving a crude measure of the span of cover. As a rule of thumb, the more illnesses the better, the lower the severity threshold the better, but the higher the premium. Most policies will cover serious cancer, strokes and heart attacks, with the devil being in the details.
All of this in-built complexity makes applying and paying for the cover rather a chore. Even a cancer diagnosis is not a guarantee of a pay-out, as if the cancer is confined to a single tumour and can be cut out, it may not meet the severity requirements.
Looking at the cancer statistics for 2012 in the UK from the Office of National Statistics, the most commonly diagnosed cancer in the UK is breast cancer in females, with 42,489 diagnoses out of 281,118 total cancers, or 15% of all cancers, irrespective of sex, diagnosed. For women, breast cancer represents 31% of all cancers diagnosed, so a critical illness product concentrating on breast cancer alone would meet more of a need than any other.
Holloway Friendly have developed a single illness critical illness protection plan delivered as a free to download “App” to an iPhone, iPad, Android phone or tablet, for review and purchase by click. All of the policy details, payment details and documentation is available on the App without up-front purchase, so we hope that people will evaluate it, get a quote and think seriously how they would cope if they got a breast cancer diagnosis.
As this policy is only addressing one peril – admittedly the one that has the most statistical likelihood of occurrence, the premiums are affordable, for a 25 year old looking for £50,000 cover, the monthly premium will be £3.75 per month, guaranteed for life.
The app is currently available for iPhone/iPad at the Apple App Store and available for Android from the Google Play site, or search for “Breast Cancer Support” in either store.
Not everyone will be able to set up a policy; there are only two underwriting questions, but these will exclude a significant element of the population, who are still insurable elsewhere. For these people, and I include men who have a much lesser chance of developing breast cancer, other protection plans will offer much broader cover.
For anyone looking to protect their lifestyle and family from the usual perils of life, independent financial advice will tailor cover to match their needs as closely as possible. If you would like to know more about how we can help you plan and realise your financial goals then contact us at info@martin-redmanpartners.co.uk or call us on 01223 792 196.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.