The Association of British Insurers (ABI) has prompted insurer Unum Provident to amend its radical n...
The Association of British Insurers (ABI) has prompted insurer Unum Provident to amend its radical new critical illness (CI) plan, Elixia 123, writes Adele Burton.
The plan enables people to choose the illnesses for which they are covered in return for a reduction in premium.
Unlike most policies which cover a comprehensive list of critical illnesses, Elixia 123 divides critical illnesses into three categories.
Clients can choose to cover life-threatening diseases in category one, disabling conditions in category two and traumatic illnesses in category three. The amount of cover can be divided between the categories, for example 50% of cover can be taken out on category one conditions and 25% on categories two and three. This in turn reduces the premium amount by between 30% and 50%.
The ABI expressed concern that the policy could be confusing for customers. Clients could originally choose a 100% payout for category one leaving no cover in place for conditions in categories two and three. As a result, policyholders could find themselves not able to claim, even though they had suffered a critical illness.
Alan Leaman, head of media for the ABI, said: 'As a result of a meeting between the ABI and Unum, Unum has decided to provide a minimum 10% cover in category three. This leaves no room for misunderstanding and Unum will notify IFAs. We want to establish we are in favour of innovation and flexibility. We have a statement of best practice for the industry, but it is not intended to stifle.'
Eugene McCormack, marketing director at Unum Provident, said: 'We had always considered the ABI Code of Practice in product design and believed the product adhered to it.'
Even in light of the changes Roger Edwards, head of products at Scottish Life, said the product still needs to be explained in detail by IFAs.
He said: 'It is a brave move for Unum. Its approach takes a relatively simple concept and adds complexity, making it difficult for a client deciding what to choose.'
