Insurer admits it is brewing up a 'fundamentally different' product
Speculation is mounting that Prudential is to launch a staged benefit product in the next few months.
Although the insurer remains tight-lipped on the proposition, it has revealed it is about to pioneer a "radically" different cover.
"There is not a lot that I can say at this stage, but what I can reveal is that the product will be fundamentally different," said Paul Cowman, head of protection at Prudential.
However, COVER understands the offering, which is expected to be launched this summer, will be a staged benefit product that will pay out on severity - working in a similar way to Virgin Money's cancer-only cover that was released earlier this year.
The Virgin product has adopted a severity-based claims process under which 10% of the sum assured will be paid out if early stage cancer is diagnosed. Another 15% of the sum assured would be paid if the condition becomes an intermediate stage of cancer, or 25% if no initial payment was received.
If a policyholder is diagnosed with advanced cancer, Virgin Money will pay out 100% or any remaining balance if an early or intermediate claim has already been made.
David Heeney, chief marketing officer UK & Ireland at Scottish Re, said while he did not have any facts about Prudential's plans, the insurer's close ties with the South African insurance market suggests it will consider developing tiered benefits, which have proved popular in South Africa.
He said: "Prudential's private medical insurance joint venture with Discovery Health - PruHealth - has sparked speculation that it may consider other product initiatives influenced by innovations in South Africa.
"Discovery and other leading South African insurers have, over recent years, been active in developing new forms of 'hybrid' disability/critical illness products offering tiered benefits - in effect products that pay out different amounts depending on the severity of medical conditions.
"This approach offers an alternative to the 'all or nothing' products we have traditionally seen in the UK and which many people regard as a weakness."
However, he cautioned that although the product had been a success in the South African sector it may not suit the UK market.
"The trade-off is that the products now emerging in South Africa are significantly more complex, both in terms of claims definitions and assessment of individual cases, than those we are familiar with here.
"Striking the right balance between flexibility and complexity is always a difficult challenge.
"Products that are successful in one market often need significant adaptation to become suitable in another environment," he said.
Cowman added that Prudential had received "very positive feedback" from people it had spoken to.
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