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New critical illness cover standards set to help consumers

New critical illness cover standards set to help consumers

Plain English and standard definitions are making it easier for consumers to understand and compare critical illness cover.

Under new guidelines from insurance association the ABI, all members must revise the wording on critical illness policies. Some insurers, such as our partners Aviva and Vitality, have already taken the opportunity to improve and update their product offering, whilst all insurers must do the same by February 1 2019.

To ensure this deadline is met, the ABI has released a 29-page critical illness cover guide for its members to follow. This states that, in order for a policy to be classed as critical illness insurance, it must include cover for cancer, heart attack and stroke. Insurers must also adopt revised definitions of conditions, not only to introduce consistency across providers but also to make it easier for customers to understand and compare critical illness policies.

Under the document, insurance product information must be written in ‘plain English’ to allow consumers to understand which conditions will trigger a payout and to ensure they get the right cover for their needs. The guide also provides precise wording that all ABI members must use to outline each health condition covered, the circumstances in which they apply and any conditions that are excluded.

One of the most significant changes being brought in is to remove discriminatory wording associated with HIV. Deborah Gold, chief executive of the National Aids Trust, said that previous wording was ‘judgemental, stigmatising and discriminatory’, and that no other critical illness was treated in the same way. The Trust welcomed the move and urged all insurers to review their wording as soon as possible.

Terminal illness has also been removed as a definition, as this broad umbrella term has seldom been used in critical illness cover claims.

What is critical illness cover?

Critical illness cover pays out a tax-free lump sum if you’re diagnosed with a specific medical condition or illness that is listed in your policy, including conditions such as cancer, multiple sclerosis and heart attack. Designed to support you and your family financially while you potentially undergo treatment and adapt to your diagnosis, critical illness policies don’t stipulate how a payout should be used, allowing you to choose whether to pay off your mortgage, access private medical treatment or manage household bills.

Critical illness insurance is often bought as a package with life insurance. Here, you can choose from a term life policy, which provides cover for a set number of years, or whole of life cover, which runs until you pass away and is therefore guaranteed, or assured.

Ahead of February’s deadline, our insurance partner Aviva has increased the number of conditions it covers and added a ‘hospital benefit’ of up to £3,000 for a hospital stay, as well as extending its child critical illness cover. Vitality’s ‘serious illness cover’ has been updated to include new conditions, enhance existing definitions and simplify the structure of its offering, while Old Mutual Wealth has made nearly 80 enhancements, including a combination of new medical conditions, enhancements to payment conditions, improvements to children’s cover and clearer definitions.

To find out more about critical illness cover and the other types of insurance that are there for you when life doesn’t quite go to plan, speak to one of our experienced advisors on 0800 862 0373 or compare quotes online.