Partial payments are becoming more prevalent in CI policies, but how to assess them? Alan Lakey investigates.
Around ten years ago two key changes were applied to critical illness plans. The first was the exclusion of early stage prostate cancer from the cancer definition unless it scored seven or above on the Gleason scale. The second was the removal of coronary angioplasty from the list of conditions.
Some years back the UK was introduced to the concept of partial payments upon diagnosis of a critical illness. Consequently there was much discussion about which other insurers would follow PruProtect's lead.
Whilst no insurer has been brave enough to design their own severity-based plan there has been the gradual inclusion of partial payment conditions. One of the first was Royal Liver which introduced mastectomy due to ductal carcinoma in situ, a condition that like treatment for early stage prostate cancer adds great value to a plan.
The main focus has been on two conditions - early stage prostate cancer and carcinoma in situ although we now see a creep into other worthwhile areas.
Some of these newer conditions offer limited scope for a claim but the trend is to clamber ever upwards with yet more conditions, albeit limiting the potential payout.
The table below this article, which ignores the PruProtect offering, highlights the partial payments currently available and shows LV clear of the pack with Skandia and Friends Life not far behind.
Some companies include a number of these conditions within the main 100% body of their plans. Both Friends Life and Skandia meet the full sum assured for severe Crohn's disease whilst LV= limits payment to £25,000. Aviva pays up to £20,000 for surgical removal of an eyeball whereas Aegon, L&G, LV= and Zurich pay 100%.
It can be seen that merely counting the partial payment conditions can lead to a false assumption or value.
The pertinent question is what actual value they add. Carcinoma in situ of the breast clearly adds benefit with annual diagnoses of around 48,000. Some providers exclude certain treatments and others exclude Lobular carcinoma in situ which accounts for 9% of diagnoses.
Coronary angioplasty is another condition that advisers might consider. Annually, around 90,000 interventions are carried out of which over 75% are on men. Around 60% are on people who have previously suffered a heart attack or undergone heart surgery, nonetheless this leaves about 35,000 individuals of which 40% are under age 60.
Contrast this with Lobectomy where 88% of all 4,000 or so instances were due to malignant cancer, something which would already be covered. Similarly surgical removal of an eyeball throws up about 500 instances each year with two thirds being due to cancer.
Carcinoma in situ of the testicles requiring surgical removal is another low risk condition where just over 400 annual diagnoses are advised and 250 operations are similarly advised - not necessarily for that condition.
The message is, don't count the numbers of partial conditions offered as it can be misleading. Focus on the early stage breast and prostate cancers as well as the angioplasty offerings and check treatments included and claim requirements. n
Alan Lakey is director of CIExpert Ltd
