Most parents do everything in their power to protect their children and put their children's needs before their own. No doubt you'd think our industry would be all over this. But it's not. Children's critical illness cover, while offered by many providers, is the conversation that often gets lost. It's the afterthought. This is largely because of proposition design.
Children's cover is usually built into adult critical illness cover only, so an adviser can only discuss it if the parent takes out critical illness cover for themselves. This means many children and their families are missing out on valuable cover. At Guardian, we think they deserve better. Children deserve their needs to be given the same weight in the protection conversation.
Let's look at why. The impact of a child's critical illness on a family is devastating. Take cancer - the big reason children need cover. According to children's cancer charity CLIC Sargent, around 4,500 under-25s are diagnosed with cancer each year. Which is 12 families every day1.
When a family receives that diagnosis, is it realistic to think they can carry on as normal with their daily lives? The charity found 42% of parents had to stop work because of their child's cancer treatment. 19% of parents took unpaid leave for over a year, and 49% of parents experienced a loss of earnings2.
A child's serious illness is going to have a huge impact on family finances and should be a crucial part of any protection conversation. So… what's stopping us talking about it? In my view, proposition design plays a big part. The typical design doesn't lead to the right level of take-up or outcomes. A number of things need to change.
Number 1. We need to look at access to children's cover. Most providers automatically include children's critical illness cover with adult critical illness policies only. This means if a customer just wants life cover, or if they can't afford or aren't eligible for their own critical illness cover, then they can't get children's cover. That wipes out a huge segment; families who are missing out on the ability to protect their children.
Children's critical illness cover should be an optional extra. It should be possible to add it to any adult policy, either life or critical illness, at any time. When you consider the size of the life cover market compared to critical illness cover, this would make a huge difference to the number of families who would be able to protect their children.
At Guardian, that's what we've done and we're starting to see it play out in our claims. So far, 100% of our children's critical illness payouts have been for cover attached to an adult life policy. We're only at the start of our journey but these are encouraging signs. Quite simply, these are claims that wouldn't have been paid if we'd followed the market and offered children's cover as part of the parent's own critical illness policy.
Number 2. We think there should be more control over the amount of cover parents can put in place for their children. Having a ‘default option' doesn't really enable parents to think through, and have a meaningful conversation about, what they might need as a family.
Most providers limit the amount to £25,000. We don't believe £25,000 always gives a family the financial breathing space they need, especially when you consider that the average (median) full-time salary in the UK according to the ONS is £31,0003. Looking after an ill child can be costly, and we already know the parent may need to take unpaid leave or have to stop work entirely. The family - not the insurance company - needs to decide what amount works for them. In the same way, if a family doesn't need children's cover, they shouldn't have it automatically included in the price.
At Guardian, we allow parents to choose between £10,000 and £100,000, to a maximum of their own amount of cover. Adding £50k of Guardian's Children's Critical Illness Protection costs about £10 a month. That's less than a family takeaway! And when a parent or legal guardian adds children's cover to their policy, they pay just one amount to cover every child in the family plus any new arrivals. Natural, step and adopted children are all included, and every child is covered right through their college years to age 23. We think this is more in line with today's world, where children remain dependent on their parents for longer.
Number 3. Protection is not just about the money! It's also about support. Many people are unaware of the range of additional services they're entitled to as part of a critical illness policy. With any critical illness claim, a payout alone is rarely enough. The claimant often needs emotional support or other help. This is just as true for children and their families. By putting children's critical illness cover in place, it helps the family become aware of what's available. Which means they are more likely to turn to their insurer for help if they need it.
It's best demonstrated with a case study. Sadly, last year a Guardian policyholder give birth to a stillborn baby in the later stages of pregnancy. She and her husband had bought dual life, life only policies. They'd been planning to start a family, so their adviser had recommended they add on our optional children's critical illness cover. This meant that although they weren't covered for critical illness themselves, their unborn baby was. When the stillbirth happened, the couple received a funeral benefit of £10,000 and used our HALO service. They were referred to RedArc, and their personal nurse adviser suggested counselling. We supported the course of sessions, as well as a few more which RedArc felt mum needed.
What's clear is that, for this family, the additional support from RedArc was of huge value. But if the couple had not put in place cover for their unborn child, they would have been unlikely to turn to us for emotional support. We'd have been unaware of their needs and they'd have gone through this awful experience alone.
At Guardian, we believe in better. We know better proposition design leads to better outcomes. That's why we've designed our children's critical illness cover as an optional extra with flexibility around the amount of cover. We think children deserve protection and they deserve a bigger place in the protection conversation.
It's time to put the children first.
- CLIC Sargent, A Strategy for 2020-2025.
- CLIC Sargent, Cancer costs report, September 2016.
- ONS, Average Employee earnings in the UK: 2020, November 2020.
Guardian Financial Services Limited is an appointed representative of Scottish Friendly Assurance Society Limited. All products are provided by Scottish Friendly.