Pegasus first launched into the critical illness market in 1991. However, it was not until April 199...
Pegasus first launched into the critical illness market in 1991. However, it was not until April 1996 that, buoyed by its continuing success in the market place, Pegasus divided its CI offering into three core areas - the Pegasus Business Assurance Plan, Personal Assurance Plan and Personal Term Plan.
Nick Kirwan, Pegasus product development manager, says: "The three plans are all similar as they are based on the same critical illness cover and the same premiums but are tailored to the specific needs of each market."
For example, you can have a Personal Assurance Plan with guaranteed insurability options that allow you to increase the sum assured on moving home, getting a promotion or having a child. With the business plan, on the other hand, you get a partnership/shareholder option that allows you to increase the sum assured of the value of the business. There is also an employee option that allows you to increase the sum assured in line with the employee's salary and a business development option that allows you to increase the sum assured if you are taking on new premises or taking over another company.
Neither of Pegasus's Personal plans achieved all five shields because, unlike the Business Assurance Plan, they do not offer a regular income facility and therefore did not meet the flexibility criteria.
"On our business plan it is called the 'annual payments option'," says Kirwan. "The way that it works is that at the point of claim the customer can decide whether they want to increase the sum assured by 10% or have the payments made over five annual instalments - the obvious benefit here is that the customer can then defer tax payments."
In terms of innovation, Pegasus is the only provider on the market to allow policyholders to buyback critical illness cover after they have made a claim (whole of life only). The whole of life version also provides a long term care option whereby the policyholder is covered for Alzheimer's, dementia, Parkinson's, blindness, deafness and loss of independent existence after age 65.
"One of the things that is often missed with critical illness plans is different illnesses have different impacts on peoples lives," says Kirwan.
There are some illnesses that start gradually and get progressively worse, such as Alzheimer's, and with illnesses such as Parkinson's, it is possible that the claimant will still be working during the early stages of diagnosis. On the flip side, a heart attack will impact on someone's life immediately but does not necessarily mean that they will never work again.
"The concept behind the long term care option is a simple one," says Kirwan. "We sell whole of life plans so if people need cover for the whole of their life they can. But, of course, when people retire their needs change. The reason people buy critical illness cover is to protect things such as their mortgage, to protect against losses relative to earnings or to protect the family and school fees and such. But when people retire their income will come from a pension, they have probably paid the mortgage off and the kids are more than likely to have flown the nest. So because peoples' needs change we allow them to change the plan, to swap the critical illness cover for long term care cover."
Kirwan says that it makes perfect sense and that because the plan does not automatically convert to the long term care option, those that want to keep the critical illness option can do so.
The Business Assurance Plan can be written on a whole of life, level or decreasing term basis, but the whole of life version affords more options to the policyholder. It covers 31 conditions including those 20 as defined by the ABI. For certain conditions it provides additional cover over and above the standards set by the ABI. For example:
l Aorta graft also covers traumatic injury.
l Benign brain tumour also covers tumours in the meninges.
l For coma, there is no time limit and no life support requirement.
l For heart attack, there is no requirement for chest pain.
l Heart valve surgery covers keyhole surgery.
l There is no age limit for motor neurone disease or Parkinson's disease.
l The loss of limbs definition uses the 'ankle/wrist' wordings.
Kirwan points out that the standards as set down by the ABI were only "minimum" and says that it would breach the core principles of European competition law if a company could be prevented from giving more to the customer for nothing.
"In many ways, what we try to promote is the Pegasus brand value, the best quality cover at a competitive price," he adds.
Pegasus is also the only provider to cover single vessel angioplasty and valvuloplasty and was the first to cover stepchildren under children's cover.
"We work hard listening to what out customers needs are," says Kirwan, "and it is just a fact of life that people have stepchildren nowadays. Couples get divorced, they re-marry and suddenly there are stepchildren to consider and we want to cover them. Why wouldn't we? These things are obvious when you see them in black and white - it is just coming up with the idea."
So what of the future?
"Innovation has been key to our success and we want to expand on that. I think there will be new innovations and I am sure that illness definitions will be reformed. Now that we have standard definitions in place providers will strive to make their products different in other ways. As a result, we will see providers adopting a more innovative stance to meet the customers needs and fend off competition."
