A serious accident can have a severe impact on a client’s life. If the result is a prolonged period of hospitalisation or permanent disablement of some form the financial consequences for the client and their family can be massive, both in the short and longer term. Financial assistance at such times can help clients and their family to focus on recovery without worrying about their bills. Where the resultant injuries cause ongoing detriment to the client additional financial aid can help the them adjust to their circumstances, make changes to their living environment as needed or even help fund additional care. In this insight we look at what financial aid critical illness insurers provide following a serious accident.
Across the market most insurers offer coverage for the most common conditions caused by severe injuries where the result is some form of permanent disablement. Brain injuries are the biggest cause of hospital admissions due to injury as our panel of independent medical practitioners explain:
“Accident and injuries are known to be the leading cause of death throughout Europe in those aged between 1-40 years old. Head injuries account for the majority of traumatic death and disability in this group. NHS hospital data shows that there are around 1.4 million traumatic head injury attendances to emergency departments in England and Wales annually, with between 100,000-200,000 requiring hospital admission after assessment. Statistics documented by NICE suggest that approximately 40,000 of those admitted, will have either a skull fracture or features of brain damage. The vast majority will make a full recovery, but others are left with long term disability from brain damage or even die from their injuries. These are the cases that would be covered by critical illness insurance policies.
Recent UK data from The Trauma Audit and Research Network showed that the causes of severe traumatic brain injuries are very different depending on age. In younger age groups, the majority are from road traffic accidents, but in the elderly age groups falls are the much commoner cause.”
Where a client is hospitalised due to an accident or injury a number of insurers will pay an additional benefit based on the number of consecutive days spent in hospital. For someone to be hospitalised for this period of time they will clearly have significant injuries and as such are likely to be able to claim on one of the main conditions covered (although not in all cases). Across the market there are two approaches to payment in such circumstances each with their own merits.
- AEGON, Canada Life and Legal & General offer a benefit whereby they will pay a fixed amount (£5,000 for AEGON and Legal & General and £7,500 for Canada Life) if the client is hospitalised due to an accident resulting in physical injury for a period of 28 consecutive days. Whilst for AEGON and Canada Life the payment can be made in addition to a claim under one of the main definitions, Legal & General will not pay this benefit if a valid claim has been made for terminal illness or one of the critical illness definitions.
- AIG, Guardian, LV= and Royal London on the other hand offer accidental hospitalisation as an additional payment condition and will pay a percentage of the sum assured (25% for Guardian and Royal London, 50% for AIG & LV=) up to a maximum fixed monetary amount (£50,000 for Guardian, £35,000 for AIG, £30,000 for LV= and £25,000 for Royal London) if the client is hospitalised due to an accident resulting in physical injury for a period of 28 consecutive days.
Under the first approach of a fixed benefit, a client could receive an additional sum on top of the sum assured if they are hospitalised for 28 days and can claim on a main benefit (with the exception of Legal & General). Alternatively, if the client does not meet the criteria of a critical illness definition they can receive the benefit as a stand-alone payment.
The second approach (depending on the size of the sum assured, see below) is likely to pay more in the event that a client does not qualify for one of the main critical illness definitions. If the client’s condition does qualify for payment under one of the main critical illness definitions, then the full sum assured will be paid with no additional benefit meaning the fixed benefit approach would pay more (except for Legal & General).
With the exception of Guardian and Legal & General, all insurers listed apply exclusions to their hospitalisation benefit. These are scenarios where the accident has been caused either directly or indirectly as a result of alcohol or drug abuse, a criminal act committed by the client or self-inflicted injuries. Of particular interest is the alcohol and drug abuse exclusion, as this is a big cause of accidents and particularly head injuries as our panel of medical practitioners explain:
“Alcohol and drug use are strong risk factors for head injury. It has been previously estimated, on review of European data, that between 24-51% of all traumatic head injuries in adults are associated with alcohol ingestion. It is worth noting that large differences in figures reflect changing alcohol habits between counties and times.”
The chart below highlights which exclusions each insurer places on their accidental hospitalisation benefits:
In addition to their accidental hospitalisation additional payment condition, LV= also offer enhanced payments on ten of their main critical illness conditions if the cause of the condition was an accident. The conditions this applies to are obviously the types of conditions which could be caused by a significant injury:
- Blindness – Permanent and irreversible
- Brain injury due to trauma, anoxia or hypoxia – resulting in permanent symptoms
- Coma – with associated permanent symptoms
- Deafness – permanent and irreversible
- Loss of hand or foot – permanent physical severance
- Loss of independent existence – unable to look after yourself ever again
- Loss of speech – permanent and irreversible
- Paralysis of limb – total and irreversible
- Surgical removal of an eyeball
- Third degree burns – covering 20% of the body’s surface area or affecting 20% of the area of the face or head
If a client meets LV=’s standard definition of one of these conditions which has been caused by an accident the they will receive twice the sum assured up to a maximum additional amount of £200,000. LV=’s definition of an accident in this scenario is “any violent, external and visible event that happens by chance, solely and independently of any other cause, which results in a bodily injury being sustained”.
Interestingly there are more exclusions placed on this benefit than under their accidental hospitalisation definition as shown below:
With the exception of injuries caused by alcohol (as highlighted above) the number of accidents caused by this list of exclusions is relatively low. This aside, a client may be forgiven for being upset if they couldn’t claim extra after suffering serious injuries from a mugging for instance.
In any event suffering from one of the conditions listed by LV= would result in drastic changes in the client’s lifestyle and as such the additional payment to support them with the financial burdens of moving on with their life would be very welcome.
The impact of suffering from a serious injury as a result of an accident will often be instant. Insurers that can offer more financial support to aid both the client and their family cope with the after-effects could really make a difference.
LV= are really leading the way in this area with high payments for the more common injuries/conditions that are caused by accidents as well as an accidental hospitalisation additional payment condition for those that spend a prolonged period in hospital but might not qualify for one of the main conditions. AEGON and Canada Life are strong for offering additional payments on top of the sum assured if a client is hospitalised for an extended period as a result of an accident, whilst Guardian and Legal & General should be commended for not having any exclusions in their accidental hospitalisation definitions.