Critical illness products are continually evolving worldwide. With this in mind, Greg Becker checks out some interesting developments in Hong Kong.
This product has waiver of premium benefit, where depending on the first illness, premiums are waived after the first claim, with the multi-pay benefit remaining in force. Interestingly, a material share of polices – about 10% – are purchased by parents as a policy on a newborn child. A newborn child can have coverage paid by their fifth birthday, with coverage lasting until age 100.
This product has been doing very well, selling almost 10,000 policies a month. While it was not the first multi-pay product, the ability to make multiple cancer claims has proven to be a benefit that has found favour with customers.
The ABI’s continuing initiative to improve customer understanding of CI insurance should be lauded, and the progress it has made in standardising definitions should be seen as a significant step on the path to reducing confusion in the market.
The UK market’s products range from PruProtect (which has a product with more than 150 diseases) at one end of the spectrum, to HSBC’s TraumaChoice (with just five) at the other. The vast majority of providers and offerings offer between 21 and 23 of the ABI-defined CI definitions, and this certainly facilitates product comparison.
With some still seeing innovation as competing to add new diseases, is a multi-pay option more in our customer interests? Friends Life, PruProtect and Scottish Provident all have multi-pay products – but all the products with this feature already cover more than 30 conditions.
Statistics indicate a policyholder has a greater chance of suffering from a second illness covered in the ABI definitions than from one of the rarer supplementary illnesses.
It may be a question for the actuaries as to which product offers greater protection: a multi-pay five disease product, or a single pay product with more than 100 definitions. But whether the number of diseases covered is the principle dimension we should look to innovate on is a question for all of us.
Greg Becker is product development actuary at RGA
