A clever combination of protection cover could be the key to closing the protection gap for parents who need to take time off to look after a sick child.
This is according to Paul Roberts, propositions and distribution director at CI Expert (pictured), who reflects that current CI offerings can often provide inadequate cover for a parents’ needs in these most difficult of situations.
A key issue is that any children’s cover usually associated with an adult critical illness (CI) plan, will stop when an adult makes a full payment claim on their plan. This is particularly impactful if a couple have a joint life first-event critical illness plan, Roberts told Health & Protection.
Furthermore, Roberts questions whether £25k, the average amount of child cover per plan, is enough for a parent to look after a seriously ill child for any length of time in today’s uncertain times.
As the child CI proposition is built into most insurers’ CI plans, it is costed even if it’s not needed, and for some mortgage protection with decreasing plans the child cover also decreases in line with the adult cover, Roberts points out.
No-brainer
However, advisers can help tackle these issues through a clever combination of protection cover to offer ‘income protection for parents’.
“If I was an adviser, which I’m not, I would be considering looking at this in a slightly different way,” Roberts continued. “A type of ‘portfolio’ approach could be adopted to include a combination of several existing CI plans as well including children’s CI benefit within an IP plan too.
“For example, using a minimum premium Zurich life cover only policy, with £100k of their enhanced children’s cover and if the individual or individuals were planning on having children in the future, they could include Zurich’s pregnancy and early childhood (PEC) option too, on every person who have or are considering starting a family whether that’s male or female,” Roberts told Health & Protection.
“It’s a no-brainer. The only consideration you’d have is recommending something that may happen in the future, but that’s what we’re all doing.”
Aviva upgrade and L&G extra
But Roberts also considers adding a combination of minimum premium Aviva upgraded plan and a L&G adult extra plan due to their product design.
“As the Aviva upgrades children’s CI cover is ‘fixed’ at £25k it would be possible to add up to £50k worth of children’s cover, if you include the extra care cover conditions, to a minimum premium Aviva upgrade CI plan while it would also be possible to include up to £40k extra children’s cover a L&G children’s extra plan for an adult cover amount of £40,000,” Roberts continued.
“So by combining three existing plans each individual parent has now got nearly £200k worth of children’s cover on both parents and all children, simply by combining what’s available today.”
Self-employed
And for the self-employed, Roberts added he would consider British Friendly for another £25k worth of children’s cover on either their Protect or Breathing Space IP product, Royal London’s child illness and loss benefit or LV=’s parent and child cover.
“Because one of the reasons you’ve got an IP product is it doesn’t matter how many times the policyholder claims on an IP policy, the cover continues,” he continued.
“The only way an IP can stop is if the policy holder stops paying their premiums. “It’s also important to consider further children’s cover up to £100,000 is available from both Guardian and Vitality across their life cover, CI, serious illness and income protection plans too,” Roberts explained.
“By combining ‘children’s critical illness’ cover currently available across the range of different insurers full range of life cover, critical illness/SIC and income protection plans it’s possible for advisers to create a bespoke income protection plan for parents based on the impact on the parents and that can help remove the financial worries all parents experience when one of their children becomes seriously ill for an extended period of time.”
