2011: 50/50 – Jonathan Levine
Financial planning involves planning the life you want, but also making sensible provision should life not deliver all that you hoped. Insurance is not something that many of us think of in warm terms, but the truth is that for those without adequate capital the right insurance is as welcome as England winning the world cup (assuming that you are English). Insurance can be a life saver and the UK provides world leading insurance.
Many of you may have taken out critical illness cover at some point in the past, the need for the cover needs to be reviewed regularly – it does become increasingly more expensive. However, every time I have a client that is unfortunate to be diagnosed with a serious illness like cancer, I’m grateful that I advised them to take the cover out. Sadly some people don’t have cover and of course only discover its merit once they are diagnosed with a serious condition and then of course wish that they had some. Unfortunately this happened to someone I know last week. My thoughts are with them as they come to terms with the medical treatment and uncertainty about the future, not to mention the impact on finances and lifestyle.
One company that has been a major player in the Critical Illness market is Scottish Provident. They took over SMA Pegasus many years ago, a company that was one of the pioneers in the market. Anyway, Scottish Provident recently announced that of the claims that they received in 2011, they paid out 91% of them. The average payout was £81,883 with the largest single payment being £945,709. In total they paid out over £89m in claims in 2011 for critical illness. 65% of claims were for cancer (average age 47) – with 33 different types of cancer claims, of which a third were for breast cancer. The next largest set of claims was for heart attack (12% – average age 50) and stroke (6% – average age 47).  Importantly of the claims submitted 2% were not paid because Scottish Provident discovered material non-disclosure on the original application form. The remainder (7%) simply did not qualify because the illness suffered did not meet the definition of a critical illness. A quarter of all claims were paid to people between the ages of 45-49 (the largest group of claimants).
The moral of the story is to make sure that if you need critical illness cover it is with a really good company like Scottish Provident and that you provide full disclosure of your medical history within an application form. My role as a financial planner is to help assess if you even need cover, if so how much and then I put on my IFA hat to do the leg work to find the best combination of cover, terms and price – which will be a price that is not inflated with commission, because we charge fees for our work and do not have to sell policies to get paid.
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