Royal London has introduced a number of enhancements to its Critical Illness Cover (CI) plans, with a focus on child and parent benefits plus greater flexibility.
New customers can choose one of three children’s CI options: CI with no children’s cover (with a reduction in premiums from standard rates), CI with standard children’s cover available with standard rates, or enhanced children’s cover with upgraded benefits for children and an increased premium.
Enhanced children’s cover includes an additional 12 child-specific conditions and an increased payout for a valid child CI claim of 50% of the sum insured up to a maximum of £50,000. This option also means a child would be eligible for a payout of 25% of the sum insured (up to a maximum of £25,000) for the additional conditions that were previously only available to adults. These include conditions such as hospitalisation of a child following an accident, or partial loss of sight which children are not eligible to claim for under standard children’s CI cover. If a child covered on the policy were to die, £5,000 would be paid.
The 12 child specific conditions covered are:
* Cerebral palsy.
* Child diabetes mellitus Type 1.
* Child intensive care benefit.
* Cystic fibrosis.
* Down’s syndrome.
* Edwards syndrome.
* Muscular dystrophy.
* Osteogenesis imperfecta.
* Patau syndrome.
* Spina bifida.
Choosing the enhanced Children’s CI option also provides the person covered by the plan and their spouse, partner and children with cover for nine pregnancy complications with a payment of £5,000 per pregnancy. This means if a person has an individual policy and their partner is diagnosed with one of the listed pregnancy complications, they can claim even though their partner isn’t covered under the policy.
Royal London says a key driver for the changes was to give customers flexible choices. Not everyone will need children’s CI when they take out a plan; they can now remove I later, but it can also be added later if they have a child or are thinking of starting a family. If the plan includes Children’s CI at the start, it can be removed later too – perhaps because the child has grown up and they are no longer eligible for cover. The enhanced cover is designed to protect parents from pregnancy through to the children reaching young adulthood the insurer says.
Other changes include modified definitions for some critical conditions.
What They Say
Proposition lead Jennifer Gilchrist said: "As a mother I don’t want to think about my child being seriously ill but, the reality is, it is the fourth most common reason for a critical illness claim. By improving our Children’s Critical Illness Cover, we are offering wider cover to families, from pregnancy right through to young adulthood. As not everyone has a family, we are also adding the option to remove cover.
"We’re avoiding a one size fits all. We’re building products to suit customers’ needs – not the other way around. We’ve designed our cover with impending parenthood in mind – but we’re cost conscious too. We’re not asking customers to pay for this tailored cover if they don’t need it."
What We Say"Royal London says advisers can now tailor CI in line with their clients’ changing family and financial needs, so ensuring they have flexible cover and are not paying for a benefit they are not eligible to claim for.
"That makes sense – non-parents otherwise are being asked to cross-subsidise parents and having a plan benefit they could never benefit from. That’s not such a serious issue as self-employed people being missold PPI policies, but the option does help show insurers are trustworthy and thinking about what their customers want and need – and their budgets.
"The main downside (although you can also argue it’s an upside!) to this approach is more decisions have to be made. That said, the decision upfront is simple – whether to have CI cover and, if so, which type. Whatever decision is taken, that can be changed later. Moreover, offering choice enables the adviser to have a very positive discussion with the client about their needs and how best to meet them.
"Children’s CI cover is increasingly being seen as important. CIExpert’s Alan Lakey says it now makes up up to 10% of CI claims. It is now becoming a differentiator too, as CI designers look to take the product to the next level. We still think there’s more to do, but this looks to be a very positive development that will be welcomed by parents and non-parents alike."