Kathryn (00:06):

Hi everybody. We are on episode two of season seven and we have Paul Roberts from CI expert with us. Hi Paul.

Paul (00:12):

Kathryn, great to be, great to be with you on a slightly chilly but sunny morning. So how

Kathryn (00:18):

Are you? Absolutely. I’m good, thank you. How are you?

Paul (00:20):

Very well, thank you. Great to be here. Thanks for asking us to be involved.

Kathryn (00:24):

Absolutely. It’s good to get some insight on some critical illness, some deep diving into different things and comparing the way that the market works. So today we are going to be doing just that, looking at the differences between insurers and things to consider, especially if you are replacing a critical illness policy with a new one. This is the Practical Protection Podcast. So Paul, I think we quite got to start off with a bit of a history about critical illness cover. So I’m like when and how did it all start,

Paul (00:59):

Kathryn, of course. And I wonder how many of actually know that critical illness will be 40 years old this year.

Kathryn (01:05):

That’s insane, isn’t it?

Paul (01:07):

Unbelievable, unbelievable. Dr. Mar Barnard, who many of you may remember, was an eminent South African cardiac surgeon and he observed that to most patients who had a heart attack, also suffered financial hardship and as a result were compelled to work while recovering from the operations of undergoing treatment such as chemotherapy, which obviously had a tremendous impact on how quickly they recovered. So he suggested to the South African insurers at the time they should introduce the ability to pay out a capital sum on the diagnosis of cancer or heart attack. And at the time, Crusader Life entered the South African market in 1983 with a simple for condition plan that covered cancer, heart attack, stroke, and coronary artery surgery. So it was a tremendous step forward for individuals at that particular time and it took a while. But the first critical illness plan as we know it’s a day, came to the UK from Canon Lincoln in the mid 1980s and it was actually called dread disease cover at the time. And other insurers such as Abby Life and Ano Dunbar were quick to follow and for some years it was only available via direct Salesforce, all the direct sales forces at the time and most early plans were also standalone critical illnesses as we’d call it today. So they had no elements of life cover or accelerated or additional. They usually had a 28 or 30 day survival period too. So that added some form of waiting period between the diagnosis and the ability to actually claim off the policy.

Kathryn (02:51):

Yeah, I think that’s a really important one because I think from an advisor point of view, and it’s something for people, I do find protection advisors at times, especially when I’m doing training for a lot of people who don’t do protection regularly, there is that, it’s not obvious I think to a lot of people when they do standalone critical illness cover especially they’re advising on it about that survivability clause. So very, very basic example, your range of policy for somebody, they have a heart attack on the Monday, so you think, okay, they should be able to claim on the critical illness cover but four days later they die. Well if it’s standalone critical illness cover, they’ve died within the survivability period, which means that the policy will not pay out because they’ve not survived that timeframe. If it’s combined with life insurance, which is what a lot of advisors do, it would automatically transfer to the death claim. So yeah, I think it’s really important to just highlight that bit there because a lot of people just don’t seem to get that and understand that that’s why the standalone critical illness cover is sometimes something that advisors can shy away from

Paul (03:50):

Kathryn. It’s a tremendously important part when it comes to the advice recommendation and understanding that a standalone policy by its nature doesn’t have any form of life cover. There will always almost certainly be a survival period which varies. So advisors will need to consider all of those things and hopefully the research platforms available to advisors will help them come to the right decision about which particular policy is most suitable for any given situation. But you’re right, it’s an important consideration and one that everyone should be aware of.

Kathryn (04:27):

Absolutely. I know we’ve done the really beginning bits, but I think it was around the nineties that there was some other interesting things that were happening. Is that right?

Paul (04:38):

Well yeah, Kathryn absolutely. In the early 1990s the advisor supported insurers began to enter the CI market and they brought a level of respectability if you like, or acceptance that it became available to a wider population via a fully advised process. Abby Albany live soy were the first mainstream insurer at the time in probably 19 September, 1991 I think. And that introduced a eight condition policy which included TPD but didn’t actually have any children’s cover at the time. While Scania life in December, 1991 launched the plan which included 24 conditions. So during that particular time where intermediaries were supported by insurers to launch CI plans, there was a tremendous difference between the different ones being offered at the time and the impact of this led to competition between insurers and if we use LNG as an example of a typical insurer at the time, tremendously important one too.

(05:57):

We can see that the condition numbers that they introduced jumped from 22 conditions in a policy from 1996 to 29 in 2004, 34 in 2007, 38 in 2010. And by 2015 they’d introduced a 41 condition plan and very quickly triggered off an evolution in the critical illness advised market in the uk. Additional payments were first introduced I think by Scania in 2003 and they introduced breast cancer and low grade prostate cancer and I think at the time it would’ve been the lower of 10,000 pounds or 20% of the some insured at the time. And they were the first time that an insurer had added in the ability to claim additional benefits on top of the core critical illness benefits at the time. And since then there’s been a tremendous increase in the range and diversity of additional payments offered by insurers and all of which are designed to enhance the levels of payments that customers can claim on and in various different ways

Kathryn (07:10):

I was going to, you can definitely see how they’ve evolved over time and you said those jumping of numbers now I know that there’s been quite a thing at times where advisors have said we’ve been getting a bit frustrated in some ways about numbers and just more and more numbers and I know we’re starting to see a shift away from that and hopefully obviously we’re going to that a little bit more. We did start to see quite, I know we talked about how much we talked about the fact that we were having different numbers coming up, sorry, more and more competition between insurers we’re starting to get the additional payments as well. But then we also started to get even more complexity, didn’t we, between sort of the core and enhanced versions of the types of policies?

Paul (07:50):

Yes, and criticalness has been tremendously evolutionary for use of a better word over the last couple of years where insurers have focused on core and enhanced products for both adults and for children. They’ve introduced a range of tremendously valuable health and wellbeing added value services too. So that’s the ability for advisors and customers to select policies which are tailored specifically around their needs at the time that they can build in flexibility to change in the future, but also to increase and decrease the levels of cover to add in children, to add in planned children and to take all of these into account as part of an fully advised sales journey is a tremendous, evolution is definitely the right word in how insurers work with advisors and customers to make sure that they have the policies which are most suited to their specific needs, the family needs, the needs of their business as well and to be able to tailor and change those as they go through the lifetime of a policy. So there’s been a tremendous amount of change.

Kathryn (09:07):

I think when you were things there that stood out for me was that when you were mentioning about the children and adding children on and things like that, and I think what’s quite nice, and I think as an advisor it can be very difficult because when we’re looking at a comparison, we often have core and core with children that enhance for children and that’s usually in place for each insurer that we look at. So when you ask sort of like a whole of market advisor, that’s a tremendous amount of options to look at that. I think what’s nice about it in many ways is the fact that it is responding to specific needs of a person. So you might have a couple who they might never want children that might just be something that they’re just never want or it might be that you have a couple who desperately want children and unable to.

(09:52):

So actually giving them the option to not have it staring them in the face saying, well if you had children they’d be covered for this. That’s actually a really positive thing for them not to have to look at. But then also similarly, I’ve had a situation recently where I’d arranged some critical illness cover for a couple and we’d included children’s cover on the basis that they had planned at some stage to start a family. So they didn’t have the children at that time, there was no pregnancy at the time, but they’ve actually, in my general outreach to them, I reviewed to make sure that everything was okay. It’s actually ended up that I’ve discovered that they have had a child and they have had claimable conditions based upon the fact that it was things that was happening during the pregnancy and obviously if we were to arrange other children or once they were born, they wouldn’t have had those payouts.

(10:41):

So there is arguments to say that it’s a good idea to have the children’s cover in there if someone is planning on having a family. But as with anything from an advice point of view, we just need to make sure we’re very clear to people about the cost of things. I like with the critical illness cover and I know that the incredibly complex from the CI expert side looking at things, but when we are looking again from an advice point of view at the call side of things, we will look at the A BI. So that’s the Association of British Insurers. They’re kind of standard and core things and even that has evolved and changed over time as to what they class as a critical illness or not. And we all heart attack cancer stroke, they’re definitely in there. There’s some other conditions as well that will sometimes save certain severities, things like that.

(11:23):

But for anybody who’s quite new to the protection side of things, what can be quite interesting is that they’ll see some conditions and some insurers will say, well we’ve got this many A BI conditions and this many A BI plus conditions. So when they say A BI conditions it means we’ve included this. The A BI say we should include this as a minimum in a critical illness contract. And then the a BI plus is them saying, and we’ve actually gone beyond, above and beyond what the A BI say we should be doing. So as an example, that could be that there’s a condition listed and it says this condition of a specified severity. Well with an insurer they might have it as their a BI plus might just be diagnosis of this condition. So they might remove that severity aspect of it, which I think is really interesting for advisors to be aware of.

(12:10):

But I know another area that, and sorry just going back to this, but what we were talking about earlier was the numbers, the conditions race. I know that was ended up being what it was called for quite a bit and we used to get it as you say, with this competition where the insurers were just constantly adding on numbers and it would be really difficult as well as an advisor because I certainly remember quite a distinct time at one point where there was an insurer who got a huge amount of extra conditions compared to another one that was just sort like doing some extra updates at the time. But when you looked at it, the one who didn’t have as many numbers against their products in a sense they’d written one of their definitions as all encompassing sort of, but then the other insurer who had an extra 20 conditions, what they’d done is they’d taken that condition in a sense and they’d split it down into sort of 20 other ones and really defined it.

(13:04):

So it was actually a case of well there’s an extra 20 conditions covered there, but this one over here, it’s got all of those 20 just encapsulated in one and they’re actually quite a broader definition. So it’s quite hard when people say to you, well what do you look for as an advisor? And you still think, well, it’s really, really tricky because it’s like well what is the better way in a sense, is it the numbers, is it not? And we’re starting to see a change in insurers who are wanting to focus upon quality definitions rather than numbers. So without naming names in a sense, can we take us through some of the big changes that have happened recently?

Paul (13:42):

Well, it’s a tremendously complex area, Kathryn, as you kindly identified there. And I think the big changes from an insurance perspective are is they’ve quite clearly identified core and enhanced adult conditions. They’ve focused very heavily on making sure that the wordings meet the best possible outcomes for customers and it’s successfully introducing the ability to have different levels of children’s cover on the back. So you’re creating a menu or portfolio if you like, within an insurer because you could have in certain circumstances, core adult and enhanced children and vice versa. And I think that flexibility is really important when it comes to the whole advice process and how you as an advisor explain that to your customers so that they can understand it but also demonstrate visually. So it’s very clear that everybody’s reading from the same page, but also to support that with information that they can easily understand so that when they look back in time and they come to claim if that’s a situation or that they have the evidence easily available to them that they can understand and link very importantly to the advice that you as the advisor has given them.

(15:07):

And once they can see that those factors are all in the same place, they have a tremendous amount of confidence in the outcomes they’re going to get because they believe in what you have recommended to them. They’ve taken out a policy which they believe at the time is most suited to them. And in the unfortunate circumstances when they need to actually make a claim that they can make a claim understanding what they can claim for and how to make that claim and how it sits within their personal family environment or business environment and by using research platforms correctly, then that information should be made available to both you as the advisor or to you as the advisors and to your customers in a way that they can clearly understand. So the outcomes they get are what they’re expecting to get in any given circumstance and the ability to deliver that as well as compared to historic plans and also overlay the tremendously important added value services, health and wellbeing services that insurers are now offering as part of their plans is something that which will only add complexity to the critical owner sale, but it also adds tremendous value to the customer who takes out the policies and uses them in the way they’re designed to be used.

Kathryn (16:35):

Absolutely. So we were saying about how it can be really intense for advisor and we’re looking at all of these things. Do you think that we’ve got the right mix? I know we’re just talking there about, and obviously actually in my opinion about having core and then children, not children included, things like that. The ability to include TPD or not include TPD and things. Obviously from my knowledge, the success rate of A TPD claim is very different to the overall success rate in a claim for other critical illnesses that we’d be looking at. So do you think we’ve got the right mix of things at the moment or if you could start from scratch maybe what would you think? Do you think it would all look the way that it kind of looks Now

Paul (17:19):

Kathryn, that’s a great question. That is a great question. I believe that grouping conditions into outcomes is an approach that if you were starting from scratch you might want to consider. So rather than having just a list of so many conditions, the most important thing is the impact it has on the policy holder should they need to make a claim at the time of claim. So the more ability they have to do that, that’s the fundamental change that you would consider to make to a critical illness policy. And it’s not the number of conditions that you have, it’s the number of conditions that you can claim from should they be grouped. And there are some insurers who you’ll know who do group conditions at the moment and we would recognize those as being a great step forward and would encourage other insurers to take a similar approach.

(18:29):

And when we look at how our subscribers use our particular CI expert system, they use it in a way to demonstrate that their customers, whether they’re existing policies or policies they’re looking to take out today have the ones which are most suited to their needs and their budgets and their personal circumstances. And in any comparison that you make, it’s not the number of conditions that you will get from a new plan, it’s the number of conditions that you as the consumer might no longer have access to should you move to a plan which doesn’t include them. And the whole debate consideration that an advisor needs to take into account with their clients and their families is the best plan the one they have at the moment.

(19:34):

If so, then we need to leave that one alone. If they need more cover, do we need to add on to the existing plan we’ve got either using a guaranteed increase option or a fully underwritten increase or do we take out the extra amount with another insurer or do we look to replace the current plan with a new insurer or insurers? And they are the only three outcomes really that you can have from a consumer review. And what the research platforms today are designed to do is to give you the information to make those decisions. And if it is a situation where the existing policy that might be from the insurer from two or three years ago is still considered to compare favorably with the plans of today, then let’s leave that one alone. Let’s make sure that we reinforce the benefits that particular insurer has.

(20:42):

But if they had health and wellbeing services included that the customer is available, those services are available and if they need some more, well let’s top it up with another insurer if necessary. And the insurers might be different based on gender, it might be different based on whether it’s a level policy or a decreasing policy. It might be different whether it’s based on the number of children they have or don’t have. And as you correctly identified earlier, as you get on in life and you no longer have your children, you may have had your children and grown, they may be grown up and married and off by themselves, then you don’t need children included in a critical illness policy. So let’s remove the complexities of having children included. Start with because you just want an adult only policy, you probably want an adult only policy based on either of an individual within a couple because you might have a male policy and a female policy which might deliver a different outcome from a different insurer.

(21:39):

So you would need to have those to be considered as well. And you are right earlier on too, but you might want to add children in the future. So you need to consider the flexibility to be able to add those in, whether it’s existing conditions or congenital conditions or complications of pregnancy or whatever the conditions might be. Fully understanding how these the of today cover these particular conditions is tremendously important to the outcome that any consumer will get in the unfortunate circumstances that they ever need to make a claim off any of them. And during the journey that and the responsibility that we have as a research platform and you guys have as advisors is to make sure that any recommendation that you make is based on as much realistic and reasonable information that you can get to make a fully informed decision based on any individual circumstances at the time that you are making that particular recommendation.

Kathryn (22:44):

Absolutely, and I think there’s certain things in there that have absolutely pricked my ears as the compliancy person kick replacement policy. You’re saying, do we keep a plan in place? Do we maybe just top up with something new or maybe we are in a position where it’d be better to completely replace the original policy. Now that tends to be more, I think I tend to see that more in a situation where if you had a decreasing insurance policy for a mortgage that had lasted originally, I dunno 10 years and now the new mortgages 25 years or something. So the original plan is going to be decreasing far quicker than the mortgage. So ideal world situation would get something brand new to cover the 25 years, I will say ideal world situation that is just very specifically in a hypothetical context. I’m not saying you would take that approach for every situation like that. I’m just using it as an example. What can go wrong for an advisor when we’re replacing what should we be looking out for when we are replacing an original critical illness policy with a new one So that we’ve had to rule out the top up we’re looking at needing to replace

Paul (23:48):

Kathryn, you do put me in difficult positions on a Monday morning, I’ve got to say. But there are several things which have fundamental importance in replacing any given plan. So if we create a sort of imaginary priority list we’ve got, has the individual’s needs and circumstances changed from a product perspective, has their health changed, has their ability to take out a new policy on the same basis that their current one, is that still the same? Do they have children? Have they had any more children? There are a whole range of questions that need to be considered in that journey. If they have a critical policy in the first place, that’s a tremendous place to start because a decision has already been made by the customer and the advisor hopefully involved that having a critical illness policy, whether the level or decreasing and actually having one already, there is a brilliant place to begin these conversations.

(25:02):

The other conversation you can have is why haven’t you got one if you haven’t got one? Because you need to have at some stage a conversation about critical illness plans or income protection. And in addition to any life cover, the next conversation would be do you need it on a level basis or do you need it on a decreasing basis? Do you need it on a joint life first event or do you need it on two single lives? And that applies to life cover as well as to critical on. And you could argue that in the best case scenario, a individual policy on a level basis for any given individual could be considered to be a better option than a joint life first event plan on a decreasing basis. Again, it’s all down to affordability, it’s down to need, it’s down to customer circumstances, all the conversations that you’ll be having as an advisor deliver the outcome.

(26:02):

But ultimately we have to try and get our customers into a place where they have the highest most comprehensive insurance product on themselves and their families as they possibly can. If they choose not to have that for whatever reason, that’s their decision. But we need to give them the option to consider and the costs and the pros and the cons and everything that you guys do tremendously well as advisors on a day-to-day basis, have these conversations and add in all the other bits and pieces that now come with modern day plans. I guess what I’m saying is that having something is better than nothing, reviewing it regularly is a tremendously important thing. Having plans that give flexibility to change and increase and decrease and add things in are also important. But also to pose the question that is one insurer or the products of one insurer always going to be to deliver the best outcome for a customer when they could have the plans of two or three different insurers to create a portfolio of critical illness rather than a single solution.

(27:30):

And that’s for you guys to decide what’s the best to deliver in your particular advice process. But it’s an interesting concept to ponder over when you’re actually delivering that, should I put all my future critical illness eggs into one basket or should I put them into two or three different ones depending on the initial level of cover that I need and whether that needs to differ whether it’s a level policy or whether it’s a decreasing policy. And then layer on the health and wellbeing services that are now available to insurers. And of course one of the things that any replacement policy, whether it’s a life policy or a CI policy or an IP policy is that does the policy that you are replacing also have health and wellbeing services that have been added on retrospectively by the modern day insurers even though the brand that you have the policy with is no longer available, it might might’ve been encompassed in a current brand that you might not recognize.

(28:43):

So again, that’s very much down to you as the advisor understanding what your client actually has, who it’s from and who their current parent or owner is today. And then looking back at the health and wellbeing services because you could be in a situation where you have a life only policy with insurer X that has been taken over by is now part of a bigger insurer today, who’s added their current range of health and wellbeing services onto their level term policy, for example, that you’re now looking to replace to a modern up-to-date plan where the health and wellbeing service on the insurer today aren’t as good or strong or wide ranging as the ones they have on the life policy that they took out where the insurer today has made them retrospective onto the policy that you may have. Now that’s a slightly badly worded explanation, but I think what I’m suggesting is that look closely at the detail of what’s available on your plans, who the insurers that your are customers have an existing plan with and just to check a little bit closer on what else is available on top of the plan rather than just the core benefit.

Kathryn (30:09):

Absolutely, and I think from a compliance point of view, so what I would be saying to my team is that whenever we are doing a replacement critical illness policy, if that’s the right step to take for clients, is that we always provide a comparison of the old policy with the new one because I’ve not come across a situation personally where the new policy is a hundred percent better than the original policy. A really clear example of that is for older policies, especially HIV, used to be a claimable critical illness, now it’s not considered to be a critical illness anymore. The a BI have removed it from its standard set of conditions that should be included because obviously as you said, these policies and everything about this is usually based upon 40 years ago in many ways and life is very, very different medically and everything since 40 years ago.

(31:04):

So it’s very common to have a look at the comparisons and see, well actually there is a negative to the change HIV is no longer included. Now it probably will be that there’s many, many other things that are much, much better, but it’s not really possible as an advisor. And even if you did have a hundred percent or supposedly looking at it and you looked at a hundred percent better as an advisor, I would make sure that there was a statement somewhere in my recommendation that was along the lines of saying, I cannot guarantee that this is a hundred percent better than what you’ve had before. However, if you look at this side-by-side comparison, I do believe that it is and I do believe it’s worth the change. And as long as you put that in front of the client and they can see the difference so that you’ve been very transparent, very clear, that’s important.

(31:50):

An extra thing to be very mindful of as well is things like we’ve been talking here about the children’s critical illness cover. So there used to be, there’s often different percentages. So it’s usually around, I think it’s about 25% of the summer show to a maximum of 25,000. We used to have percentages that were higher than that and it might be that the times where you might be looking to move it and actually that percentage might drop. Now again, it might be the right decision for the client given their circumstances right now. But as an advisor and especially as I always think from a compliance point of view, it’s really important to just make sure you’re looking out for that. Make sure there’s a bit of a fail safe if you’ve as a company, if you are obviously a company and you’ve got advisors under you when there’s a replacement, there should be enhanced compliance checking on there and there should be things like this in there.

(32:36):

Has there been some kind of a comparison provided to the client? Does this include potential changes to the children’s critical illness cover as well in terms of percentages of cover, the additional payment percentages as well, just so that if there is ever a query, there’s not a thing of you being suddenly this person coming back and saying, hang on, you didn’t tell me about this because that’s not going to be a positive situation for the client. It’s not really a positive situation for you as the advisor who’s provided the advice. So we’re coming towards the end of the episode now. Paul and I always like to, if people have come on from a certain company to give you a chance to just have a little bit of a chat about things and what’s going on and different changes. And obviously you are from CI experts. I know there’s been lots and lots going on with CI experts that I think you’ve supported. Is it more than 24,000 advisors, which is just incredible. Absolutely incredible. But I think there’s some really key upcoming things coming up if you just want to give us a quick one down.

Paul (33:34):

Well, Kathryn, before I do that, I’d just like to say thanks very much for involving us in the conversation. It’s been tremendously interesting and we’ve only, I think touched the surface of the level of information that we go in, but we’ve got some exciting things coming. We’ve got three new insurers going on to our insight zone during February, which is a tremendous boost for that. It’s what we won the cover award innovation for last year, and we’re only going to make that better. Lovely. Yeah, we’ve got a new category based approach to health and wellbeing services going into it at the same time. So we are really looking to support advisors with more information in that particular thing. Many of you know that vitality are upgrading their particular proposition shortly, and we will be adding vitality into CI experts towards the end of February. So I’m sure that many of you out there will be delighted to know that.

(34:40):

And I think coming back to your key point, Kathryn, about the importance of understanding replacement is that within the CI expert system, when you are comparing an historic plan with a current one, our primary focus is to make you and the customer aware of the conditions that they’ll be losing. And we do that by highlighting those in red for those who are familiar with CI expert. And we also then break that down into the wordings and the definitions by using an icon service with bronze, silver, and gold gums that impacts on the significance of the changes.

(35:24):

What we’d strongly recommend is that for advisors using us, that in any replacement policy that they do make, that they’re the fundamental visual triggers that are used to explain to the customer the strengths of the plan that they’ve got at the moment, the strengths of the plan they’re looking or plans that they’re looking to replace it with, but also to fully make them aware of what they might be losing should they swap from one to another. And once you’ve taken into account all those three factors, then I think you’re in a position to make a reasonably well, not reasonably, but a tremendously strong recommendation as to whether you keep the policy that you’ve got, you top it up or you take out a new one or new ones. And once you’re in that position, then you are doing a fantastic job for your clients on a regular basis and hopefully CIX will be part of that in the future.

Kathryn (36:25):

Fantastic. Thank you so much, Paul. It’s been really good to get you on to get all these insights. So thank you everybody for listening as well. Next time I’m going to be back with an in-between episode and we’ll be talking about some updates that we are seeing in the market in regards to underwriting outcomes for people living with HIV. If you’d like a reminder of the next episode, please drop me a message on social media or visit the website, practical protection.co uk. And as always, if you’ve listened to this as part of your work, you can claim a CPD certificate on the website too. Thanks to our sponsors, the Okta members. Thank you Paul,

Paul (36:57):

Kathryn, thank you. Absolutely. And hope you enjoyed the conversation and if you’ve got any questions, please get in touch with us. Thank you again.

Kathryn (37:04):

Fantastic. Thank you. Bye.