Simplicity is a group risk critical illness insurance policy for employers of 50 or more employers. All employees must join the scheme provided that they are actively at work. The employer pays the premiums and there is guaranteed cover for all employees under age 70, with no medical underwriting or pre-existing condition exclusion.
The policy covers ten conditions only and provides a minimum of £10K cover per employee, with up to five cover steps available, typically meaning up to £60K per person cover is available. Benefits may be increased or decreased at annual renewal only, with no limit on increases, provided the employee is actively at work. Where the employer provides less than £60k cover, optionally the employee can top that up to £60K under a flexible benefits arrangement.
The ten conditions covered are: benign brain tumour*; cancer; coronary artery bypass graft*; heart attack*; kidney failure; major organ transplant*; motor neurone disease; multiple sclerosis*; Parkinson’s disease and Parkinson’s plus syndromes*, and stroke*. Definitions are broadly industry standard, with those marked with an * having an ABI+ definition. Children are covered from 30 days until age 18 (21 if in full-time education) and the benefit is 25% of the member’s benefit. There is no additional cost for this cover.
A 14 day survival period applies. Once a claim is made, cover for that employee then ceases. Cover may also cease if the member opts out of the employer’s pension scheme if eligibility is linked to pension membership.
Premiums are guaranteed for two years.
Broker reaction and further analysis of the product is available here.
What They Say
Head of proposition development Andrew Potterton said: “Although members clearly can’t claim for a heart attack they had before joining, they’re covered if they have another one meeting the criteria once the policy is up and running. Cancer history, likewise, doesn’t prevent a claim for an insured event, whether it’s a recurrence of a cancer that was thought to have gone away, or a new one. With this approach, clearer expectations may be set with staff, as current serious health conditions that could lead to a CI claim are more likely to be known to the employer.”
What We Say
"One of the criticisms of CI cover is that it has become too complex. Forty or more conditions may be covered, each one with its own lengthy definition.
"Moreover, most claims are for just a handful of conditions so adding, for example, another condition or two is likely to lead to very few additional claims being payable in any year.
"Simplicity goes against that trend, taking us back closer to the original 1980s model of fewer conditions and simpler cover. Indeed, there is no medical underwriting and pre-existing conditions are effectively covered too, which for some could be a real plus point. As you would expect, the maximum cover available is relatively low but, nevertheless, the idea of simple to buy and understand CI cover has merit.
"One downside is that an employee may suffer a life changing or even terminal critical illness and not be covered under this plan, where they would be under a typical modern individual CI plan. The analogy is buying motor insurance where cover is excluded on some types of road, albeit those where there are fewer accidents anyway.
"For products bought by individuals, that would be a serious shortcoming. Where the cover is provided free by the employer it is less of an issue and, in any event, having some CI cover may (should?) encourage employees to seek out advice on getting more cover and more comprehensive cover too.
"On balance then, this plan is certainly worth considering for employers who want to provide simple and easy CI cover – but it is not a complete CI solution for everyone."