CI exclusions and removals - how to compare?

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Exclusions and removals from Critical Illness plans can cause confusions in the future, Alan Lakey explains.

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.

With hindsight we can see the significance of these adjustments as prostate cancer results in 41,000 new diagnoses each year of which 45% have a Gleason Score of six or less. 

Similarly there are now over 90,000 angioplasty operations each year, a massive increase since 2000 when there were a round 33,000 such procedures, which of course explains the logic of insurers removing the condition.

These figures highlight the scale of the reduction to potential claims and, as suggested in a previous column, advisers would do well to heed the potential for future problems if they switch a client from and older plan to new version.

One area where confusion is sure to reign is the actual dates when insurers made these alterations. 

Table 1 shows clearly that the alterations covered a wide period with Bupa removing early stage prostate cancer in November 2001 which contrasts with Scottish Widows holding out until November 2003.  A similar story exists with coronary angioplasty with Scottish Widows removing it in October 2003 and Bupa standing firm until April 2007.

Wide disparity

As an industry we tend to generalise and make noises about the changes as if they occurred simultaneously whereas a glance at the table shows a wide disparity between alteration dates of the different conditions. 

Advisers can be forgiven for treading warily in this area or even avoiding it altogether. CIExpert’s comparison system performs this task automatically. 

Table 2 shows how the dates are of utmost importance.  A March 2003 Aviva plan scores substantially higher than its February 2004 equivalent as it included both angioplasty and early stage prostate cancer. 

Even though the current Aviva plan is wider ranging and more likely to result in a successful claim than the February 2004 version it still falls short of the March 2003 plan because the impact of losing angioplasty and early stage prostate cancer overrides the additional conditions that the current plan covers.

A similar story is shown with Legal & General and Scottish Provident, indeed this will be repeated with most insurers. 

Having this information available ensures that the advice can be sound and compliant.  

Alan Lakey is director of CIExpert Ltd  

Table 1: Introduction of exclusions from critical illness plans

Provider

Early-stage prostate cancer

removed from cancer definition 

Coronary angioplasty
        removed
 Aegon  January 2003  February 2005
 Ageas  N/A  N/A
 Allied Dunbar  September 2002  September 2004
 Aviva  April 2003  January 2004
AXA   N/A    N/A
 Beagle Street   N/A    N/A
 Bright Grey   N/A  April 2004
 Bupa  November 2001  April 2007*
 Friends Provident  January 2003  February 2004†
     January 2005‡
 Friends Life   N/A  N/A
 Legal & General  October 2002  January 2004
 LV=  February 2003  June 2004
 Scottish Provident SA   December 2002  November 2003
 Scottish Provident Pegasus  November 2003  November 2003
 Scottish Widows October 2003  October 2003
 Skandia Life   1 June 2003  April 2004
 Zurich September 2002  July 2004

 

Table 2: The effect of exclusions on CIExpert comparison system scores

 Aviva Scores Legal & General Scores Scottish Provident SA Scores
 March 2003  21,284  September 2002  21,928  November 2002  22,087
 February 2004 19,948  February 2004  20,093  December 2003  19,946
 April 2013 20,728  April 2013  20,923  April 2013 20,552

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