Young advisers have told Health & Protection about how they believe critical illness (CI ) should evolve ahead of the 40th anniversary of the launch of the first product on 6 August.
They argue that policies need to evolve with simpler definitions and tailored added value services to successfully attract and engage a new generation.
Hardest product to sell
Amy Jenney, protection adviser at Cura Financial Services, describes critical illness as the hardest product to sell to a younger audience.
“Cost is a major factor in this, even though taking out a policy at a younger age would be cheaper than later in life,” Jenney tells Health & Protection.
“A policy containing critical illness cover compared to a life only policy sees a major hike in premiums.”
But she notes the ‘It will never happen to me’ attitude is also a major barrier when trying to sell critical illness.
“I find income protection is much more relatable and when explaining the difference to the client they see income protection as more beneficial and something they will likely require if they were to fall ill,” she says.
Bella Streames, managing director at Velvet, told Health & Protection that a key issue is young people do not tend to realise that there can be other issues at play as well as possibly having to claim and not having cover.
“If you don’t have cover there could be things which happen to you medically which then prevent you from being able to get cover later,” Streames said.
“I’m diabetic and would love to be able to get cover. I had this diagnosis aged eight and so have never been eligible.”
But Streames added that given the family-run business’ line of work, her boss and Mum made sure both her sisters were covered as soon as they hit 18.
“I’ve had friends who have a fatty liver who then wouldn’t be insurable because of that condition,” Streames continued. “My younger sister has OCD and has ongoing treatment for this and would now find it difficult or more expensive to get cover but luckily she does have cover there just in case. There are so many examples where people suffer medical conditions meaning they can’t get the best cover and lowest prices any more.
“I think young people should get some critical illness when they are young to make sure they do have access to it throughout their lives and to lock in lower prices.”
Better education and engagement
But Jenney says greater knowledge among younger audiences is also required to tackle the problem.
“I spend a lot of time explaining what critical illness is and the difference between this and terminal illness,” she continues.
“I think this is something that links back to education. In order for the industry to grow, financial knowledge needs to be provided from a young age.”
Esme Pearson, employee benefits consultant at Hooray Health & Protection, maintains added value services on group critical illness need a lot of work from every insurer to attract a younger audience.
“Yulife have done a great start by adding in their app that supports with engagement,” Pearson says.
“We know that most young people don’t want to think about the chance of a critical illness and it brings the benefits to life for them, helping engage with their benefits while building team work via competition etc.”
For Shaun Payne, income, health and life specialist at 3 Pillars Financial, the best way to engaging younger audiences is to ensure their parents buy into critical illness.
“You have a client who has children, and the norm is to help them put in place the right protection by educating on the potential consequences, financially, of not doing so and it usually ends there,” Payne explains.
“However, I would like to see an extra step. I would like to see advisers speaking with their current clients, when clients children turn or are 16 about how they could safeguard their children’s financial future in the event of a critical illness.
“Advisers could take the children, in the company of their families, through a process of getting the right insurance in place, which will be paid for by the parents, until such time the child is financially independent.”
Reducing the need for exclusions
The subject of underwriting, pre-existing conditions and policy exclusions is also a key factor which the sector must evolve and improve on to help younger adults get covered.
Ashley Hill, protection expert at London & Country Mortgages (pictured), says insurers cannot afford to stop thinking about how they can reduce the need for exclusions.
“Family history is an example of an area where it feels that a more individual and flexible approach would work,” Hill explains.
“Additional questions to try and better understand whether there could be reasons to reduce or avoid a price increase rather than apply a blanket approach to family history would feel like a fair and open approach to help younger customers where possible.”
Severity-based pots for young adults
Katy Davies, specialist protection adviser at Henry Dannell, expressed surprise that more CI policies are not severity based to increase protection and coverage throughout a lifetime.
“The nature of some illnesses means people do not require time off work, and the recovery of such illnesses, especially in younger people, could be relatively quick,” Davies says.
“Young people may then suffer further claims across the hopefully long lifespan ahead of them and to be in your 20’s or 30’s with no pot of subsequent cover could be scary.
“Younger people tend to earmark savings for house deposits. We may stash money away for our annual holiday but emergency funds are not typically the sort of budgeting a 20 something year-old may consider.
“The average age of buying a home is ever increasing, especially in the current market, so for providers to advertise critical illness pots, and emphasise the healthier and younger you are, the cheaper it is, would be welcome.”
Simplified definitions
Consequently Davies adds she wants to see simplified definitions “across the board”.
“The easier providers make it for advisers, the easier advisers make it for clients,” Davies argues.
“Flexible benefits, such as childrens’ cover should be client led, and at their fingertips.
“Critical illness should be mentioned alongside life cover. Life cover is mostly redundant for a 20 to 30-year old with no dependants.
“They would benefit far more from a £20,000 pot of critical illness cover than £300,000 life cover in some instances,” she concludes.
Looking ahead, Nina Brown, protection specialist at Pam Brown Mortgages, predicts income protection will overtake CI cover.
Brown says this is because particularly younger generations want cover for the majority of conditions which may affect them.
“They doubt critical conditions will affect them at a young age,” Brown continues. “The younger generations are much more concerned with the immediate future and therefore do not feel concerned with the top three reasons to claim on a critical illness policy.
“I believe a critical illness policy should cover a greater range of conditions and not focus primarily on the top three – cancer, heart or stroke. I completely understand that the majority of providers have statistics which show these three conditions account for the majority of claims but this is due to the fact these policies do not cover a wider range of conditions.”