Adrian Garside

The ABI (Association of British Insurers) sets the manadatory definitions for Critiical Illness policies.

So, a Critical Illness policy will have 27 illnesses, all of which have a certian definition. Technically, that enables an IFA to advise on Critical Illness Insurance on a level playing field.

The problem for the insurance companies, is that if all illness definitions are the same, how do they fight for your business, other than on price.

Well, one way is for them to have a few extra illnesses – most insurers have more than just the 27 illnesses, most have over 30 and BUPA has the most at 39 (ignoring the Pru who have 100 and I’ll talk them about in a minute).

From there, I can run a list of critical illness policies, and then look for the best policy amongst the cheapest.

Another way, is to provide extra benefits – Bright Grey and AXA both have couselling services, advice services and BG even have MacMillan nurses available for cancer sufferers. So, if BG or AXA are amongst the cheapest, I’d recommend them over the cheapest ‘bog standard’ policy.

And, the latest way is the ‘ABI+’ definition. Bright Grey have just made another 3 (total of their 35 claimable illnesses ABI+ – meaning that the definition they use is easier to claim on than the ABI definition. So they say:

• Benign brain tumour – the requirement for permanent neurological deficit with persisting clinical symptoms will be waived if the benign brain tumour is surgically removed.
• Coronary artery bypass grafts – we’ve removed the requirement to use surgery to divide the breastbone.
• Heart valve replacement – we’ve removed the requirement to use surgery to divide the breastbone.

This isn’t just plain generousity, or market forces – take the last one, they hardly ever divide the breastbone these days, so removing this criteria makes sense.

So, now as an IFA, I keep an eye on the ABI+ lists…

Oh – I was going to mention the Pru – their serious illness list includes the ABI critical illness definitions, but also has 73 further illness that are claimable. In addition, many have ‘proportional payments’ so, for instance ‘total and complete blindness’ is the critical illness definition, but Pru would pay out half a claim for 1 eye being blind, or 10% claim for Tunnel Vision.

This policy is so far and away better, in my opinion, than regular critical illness insurance that I always discuss it with clients.

The ‘Man from the Pru’ no longer visits customers, he visits IFA’s and he’s just been to see me. Not today, you understand, it’s 7am as I type this – I saw him last week.

They have added ‘healthcare’ to the options on their ‘all in one’ insurance policy. My interest was mild, Healthcare is a pretty complex subject and there are many policies to choose from specialist providers and I wasn’t inclined to think he’d tell me anything that wouldn’t be revealed by running a search on my software.

But he surprised me.

They have the usual options – range of hospitals, range of cover etc and when I am looking at these options, I would put the Pru into competition with the usual providers and they would have to stand on their own two feet.

But they have an addition option that did tweak my interest.

It’s Private Health Insurance that just covers Cancer and Heart attacks. Now, the NHS are very good at Cancer and Heart attacks, from what I gather, but, good as they are, they have budgetry restraints – for instance Herseptin isn’t on the NHS, but is provided on this policy if appropriate – and the hospital experience is better when private, just by the very nature of things.

And this cover can be cheap – I was just running off quotes for a couple (him 40′s, her 30′s)  who wanted Life and Critical Illness Insurance. I added this Cancer and heart attack cover and the additional cost was £28. The cover is cheaper when run side by side with serious illness cover than if it’s stand alone because they cross subsidise the cover.

It seems to me that if you are interesting in Private Health cover, but have always found the premiums daunting, this is an ‘entry level’ product that is worth considering. Talk to your friendly neighbourhood IFA.

Critical Illness insurance is like Life Insurance in a way.  You know life insurance pays out if you die?  Critical Illness insurance pays out if you come quite close to dying, but you don’t  – so it pays out a lump sum if you are still alive.

This can be very handy, 9 times as many people could claim on critical illness insurance as life insurance, so you can imagine, alot of people decide they want this style of cover.

So, what is covered?

Well, that is the subject of the quiz. And to make it easier I’ll make it multiple guess.

a) 7

b) 23

c) 39

d) 154

The correct answer is …. it depends who you ask.

7 is the number of definitions the Association of British Insurers (ABI) says are ‘core illness’ that must be covered in a Critical Illness policy

23 is the number of illness the ABI have given standard definitions – almost all policies include these 23 illnesses.

39 is about the maximum number of illness you could expect available on a normal critical illness policy (the range is 30 – 39) You have to be a little bit careful about just looking at the number though – sometimes the insurance companies pad things out with really obscure illnesses so it doesn’t follow that a policy with 35 policies is tangibly worse than one with 36.

154 is the number of illness covered on Prudential’s new ‘serious illness cover’ – you should see the marketing literature – it’s based on the old ‘best man’s gag’ where he reads out the messages and a roll of paper unravells…

So, if you are thinking of buying critical illness cover, it would make sense to ensure your adviser (if for some crazy reason your adviser isn’t me!)  is including the Prudential policy in his comparisons – they have 2, one covers 154 illnesses, the other 93.

They are much cheaper than you’d expect.

The practice has been involved in a flurry of claims on critical illness, terminal illness and income protection.

This can be very sad, but it is good to be able to help people in these situations.

Also, from a professional perspective it’s been interesting on two fronts.

Firstly, so far, the claims have all been paid by the insurance companies – this flies in the face of ‘popular opinion’ and is very good news for our customers but also very reassuring for us, it is easy to develop self doubt when offering these products.

Secondly, the thing that I have noticed is that some of the claimants are younger than me – and I’m only 41 – which reminds me how often young people decline to take recommended insurances becuase they feel immortal. I say that without making judgement – I did exactly the same

Separately, I had a visit from the Prudential this week – they have tweaked the small print on their Serious Illness Policy – and now it is a Seriously Good Policy (hmmm, maybe I should be in marketing…). It is like a critical illness policy, but there are illnesses that are serious, but not critical. In fact, I can break this down into numbers.

All the mainstream critical illness policies cover between 30 and 39 illnesses. The serious illness policy covers up to 135.

Examples? – Prostate Cancer – serious, but not critical. Diabetes – serious but not critical (BUPA cover one form of diabetes in their policy, but it’s the rare type)

If this tweaks your interest, give me a call. 01489784022 or e-mail me – adrian@adriangarside.co.uk

Yesterday I had the results of some tests and I don’t have cancer or diabetes, which is a relief of course, although curiously it does mean I either either have ‘something else’ or nothing, both options being quite unsettling.

Anyway, there is nothing like being tested for cancer to focus the mind and my initial thoughts were money based (actually, that’s a lie, but for the benefit of the blog lets pretend they were) and it occurs to me that there is plenty of support and help for people with serious illnesses, but the financial side of things needs to be looked at and probably in quite an unemotional kind of a way.

My objective here is to get into a position where you are feeling in control and making the most of what you have.

The first thing you need is 2 sheets of paper.

On the 1st put everything you have – savings, house,  etc. And everything you owe – credit cards, mortgage loans etc. Just as an idea put the credit limit by the balance of each credit card.

The second sheet is for income and expenditure – your bank statements will help here.

Next make a list of places you have worked and note which ones might have offered you a pension – possible if you worked there for over 2 years. Then make a list of insurance, savings or any other life policies you may have had.  If the insurance or pension company has changed its name or been taken over, the  Association of British Insurers http://www.abi.org.uk/Search/default.asp will tell you the latest name or new owner.

If you have shares, make a list. You can get the prices from a newspaper or the internet.

With pensions, ask who the Nominated Beneficiaries are – the people who will get that pension benefit if you die before taking them. This may need updating especially if you have married or now have children, for example.

Now the biggest questions.

How long have you been given or what are your chances?  Will you be able to continue working? Will you be able to travel or drive a car? Will you need care? Who might be able to help you?

If you have more than two years, then you might as well carry on as normal for as long as possible.   But if you have less than two years to live, it is time to think.  There is nothing sadder than dying thinking “If only”.  But strangely, a short life expectancy may enable you to achieve one or two of your goals, that you might not have bothered about otherwise.

Take another piece of paper, and write some headings: People, Things, Places. You might want to adapt this with headings like: Family, Colleagues, Hobbies, Sports. Now the fun part, and yes I mean you ought to be able to get some enjoyment out of this. What have you always wanted to do? Pretend you have won the Lottery and let your mind run free here and don’t bother about the practicalities. Keep the list handy and a notepad and pencil with you so you can write things down as they pop into your mind. It does not matter how long the list is or how many items are on it.

Once you have done the above exercises you will have:

A financial picture of you.

Your doctors have told how long you have got and what quality of life you can expect for that time.

A list of everything you wanted to achieve.

Achieving some of the goals will need money, but you may have more than you think, which is the real point behind this exercise.

The surprises here can be pensions & life policies. Critical Illness Benefit is where a lump-sum will be paid after the claim paperwork has been done and checked and covers many (but not all) cancers.   Most life insurance policies have Terminal Illness Benefit, This means that if your life expectancy is less than 12 months, they will pay out while you are alive. ( This will depend on what answers your GP gives to the insurance company)   I have a client who asked me to look through her paperwork and we found a policy with this benefit and it paid out this year for her.

Most policies I set up have a Waiver of Premium Benefit and will be kept in force by the insurance company if you are ill for over 6 months without you paying the monthly premiums. This will help your family more than you, but can give you peace of mind and save you the outgoing in the meantime.

Some pensions can be paid out in cash tax-free where life expectancy is a year or less which can seriously improve the quality of life for the short time left.

If it helps, get your adviser involved too.

The important point about the exercises above is that they can make you feel that you are back in control of your life again, and importantly give you the chance and focus to tick off some of those ambitions.