This plan is the first employer-funded cancer-specific workplace benefit in the UK. It has a fixed sum insured of £25,000 per employee and pays out on diagnosis of a cancer.
The definition of cancer is based on the Association of British Insurers model definition as used on critical illness (CI) insurance. That means that it excludes cancers in situ, less advanced cases and non-malignant tumours. However it does include leukaemia. On diagnosis, the customer must survive for at least 14 days for the cash lump sum benefit to be paid out and claims must be notified within three months of diagnosis. All pre-existing conditions are excluded.
Cover can last up to the scheme expiry age.
In addition, the policy can provide access to a Cancer Support Service (provided by Working Towards Wellbeing – W2W), Best Doctors and the Bupa HealthLine.
Premiums are subject to review after the initial premium guarantee period (usually two years). Terms and conditions can be changed at any time after five years. Premiums are calculated after three months, to allow membership to stabilise. Future premiums will also depend on claims experience.
Employers can usually claim premiums as a trading expense, when benefits will be paid tax-free to the individual employee (member).
Commission is usually 12% of premiums paid.
What They Say
Head of group protection proposition Anna Spender said: “Group Cancer Cover has been designed to be affordable and simple, providing a level of benefit to help with the additional costs that people face while going through cancer treatment.”
What We Say
"Cancer-only cover is not new – indeed it predates CI insurance and has been popular in some territories for decades. But it is unique (so Friends says and so far as we are aware) in the UK group market.
"So why would an employer choose this plan, given that cancer makes up only around 70% of CI claims? The answer is cost and simplicity – and that the plan can help open up other planning opportunities too.
"For example, the plan should appeal to employers who like the idea of group CI but can’t afford it. It may also be useful for firms who have discontinued cancer cover under their group private medical insurance scheme but still want to provide some cancer benefit to employees. Given the significant improvements by the NHS in cancer care in recent years, the health service can now be a preferred choice for cancer care and, having £25,000 to spend how you wish may well appeal to some employees more than would having private care and no cash.
"However, there is one particular issue around cancer only cover and it’s one that it took CI insurers a while to resolve back in the 1980s. That is that some conditions, such as benign brain tumours, can have medical and financial consequences very similar to having a malignant tumour. CI insurers resolved that by adding benign brain tumours to their cover. That also led in part to adding more and more conditions in the continuing quest to get CI cover to actually cover all critical illnesses. This type of plan can’t afford such escalation, but adding cover for benign brain tumours would cost relatively little more (of over 300,000 cancers a year, about 5,000 are malignant brain tumours and just over 4,000 non-malignant brain tumours, according to Cancer Research UK data, based on 2010 and 2011 UK figures) but could materially increase the perceived value of the cover.
"Overall, although we are not always fans of limited cover plans, we do think this is well worth looking at for employers for whom it could be an ideal solution to their particular needs."