In the latest of a string of insurer enhancements, Royal London have launched upgrades to their critical illness policy today. The changes promise improvements in cover for surgical procedures, the removal of exclusions, improved definitions, simplification and longer coverage for children. In this insight we have reviewed the changes, and provide feedback from our independent panel of medical experts, to see what impact they have on Royal London’s overall coverage.
Coverage for surgical procedures
The upgrade includes a number of new surgical procedures that were not previously covered. This includes surgery for arteriovenous malformations of the brain, carotid artery stenosis, cerebral aneurysm, non-malignant pituitary gland tumours and loss or removal of an eyeball. With the exception of carotid artery stenosis (that has slightly higher incidence in older age groups, especially for males) these conditions have relatively low incidence, however they require significant surgery so are worthwhile additions to the plan.
They will also now pay a claim whilst a policyholder is on an NHS waiting list for certain surgical procedures. This is obviously a welcomed addition to allow faster settlement of claims in advance of any surgery taking place. The surgical procedures include; aortic graft surgery, cardiac arrest with implantable defibrillator insertion, coronary artery bypass graft, bypass surgery for peripheral vascular disease, structural heart surgery and ulcerative colitis surgery of specified severity.
Removal of drug and alcohol exclusions
As regular readers of our insights will have seen, last week’s insight looked at accidental hospitalisation cover across the market (see https://protectionguru.co.uk/2020/03/09/who-provides-more-support-to-clients-who-have-had-a-serious-accident/).Within this piece we explored some of the exclusions insurers apply a common one being where the accident is related to alcohol or drugs. Such exclusions are commonplace in insurer wordings and often applied to conditions where excessive abuse can be a contributing factor. In an effort to remove such barriers Royal London have done away with their alcohol and drug exclusion for their accident hospitalisation, brain injury due to trauma, anoxia or hypoxia, coma, Intensive care and liver failure definitions. This is an extremely positive move and will result in more claims being paid for these conditions.
Pulmonary Hypertension is a condition that has sparked debate in terms of whether inclusion in critical illness policies is worthwhile and this is a condition where Royal London have extended their coverage. Whilst claims for “Primary” Pulmonary Hypertension (which is what most insurers cover), are very low, the extension of the wording to include coverage for secondary causes should increase the likelihood of clients being able to claim, as our panel of independent medical experts explain:
“Pulmonary hypertension (PH) is due to raised blood pressure in blood vessels in the lungs and right side of the heart. Overall, pulmonary hypertension is a broad term and there are a number of causes. As is the case for most insurers, Royal London previously only provided cover for primary pulmonary hypertension (also known as idiopathic pulmonary arterial hypertension). This is extremely rare, with one UK study estimating incidence rates of 1.1 case per million per year. This would equate to between 50-100 cases per year in the UK.
Royal London’s new definition now allows for payment from cases that have been caused by secondary means. This would include heart disease, chronic lung disease and pulmonary embolism. There is data from the UK 2015 National Audit of Pulmonary Hypertension, that shows that there were around 1,500 patients with a new diagnosis of pulmonary hypertension at just eight specialist centres within a year of their first referral. Furthermore, referrals to these centres are mainly encouraged for patients requiring specific, specialist treatments. It follows that this audit would not give representation to those patients with causes from heart and lung disease, which make up a large proportion of PH sufferers. Therefore, incidence numbers could be in far excess of the previously stated 1,500 patients and is clearly significantly higher than if only primary pulmonary hypertension is included only.
It is worth noting that some cases would be covered in other disease wordings in a CI policy, such as those caused by heart failure, although strict restrictions placed on these wordings would not guarantee a payment for a policyholder. For example, around 50% of heart failure is now thought to have a preserved ejection fraction, which would not qualify for a payment.
Although incidence rates are lower than some of the other covered conditions, this disease has high morbidity and mortality rates, and as such any increased coverage for this disease is clearly a benefit for consumers.”
The combination of more coverage for surgical procedures, removal of exclusions and improved coverage for Pulmonary Hypertension, means the Royal London plan has increased the overall coverage for new clients as shown below.
The graphs below highlight who is most likely to pay a claim based on our independent medical panel’s assessment of insurers definitions combined with age-banded incidence data. The age-banded incidence data along with the gender, age and term of the plan enables us to weight each condition based on how likely someone is to suffer from it. Therefore, those conditions that a consumer is more likely to suffer from during the term of the plan have a far greater impact on the overall score than conditions that are rarer.
The simplification of critical illness wordings is something that thankfully seems to be on the agenda for most insurers and Royal London are no different. Whilst in terms of simplicity, these changes do not go as far as Scottish Widows who set a high standard last month, Royal London have made a number of positive changes in this area. This latest upgrade includes the amalgamation of a number of conditions, which whilst not as drastic as the changes made by Scottish Widows recently is still very welcome. These include:
- Alzheimer’s disease and Dementia,
- Benign brain tumour and Spinal cord tumour, and
- Traumatic brain injury and Brain injury due to anoxia and hypoxia.
Coverage for children
Another change made by Royal London is an increase in the maximum age at which the children of a client can claim for a critical illness. Previously Royal London set this at age 21 regardless of whether the child was in full time education or not. Whilst this remains unchanged for children not in full time education, those that are will now be covered up to age 23. This applies to both standard and enhanced child’s critical illness cover.
A last positive addition to the plan is the inclusion of a child conversion option. This is only available to those that take out the enhanced children’s cover and will allow the children of the life assured to take out up to £50,000 critical illness cover in their own name when they become ineligible under the main policy without any further underwriting.
Whilst we would ideally like to see more done to simplify the definitions within the Royal London plan, all changes are positive and result in better coverage for clients. We are particularly pleased to see the removal of alcohol and drug exclusions and the addition of the option for children to continue their cover without further underwriting is certainly a push in the right direction to help insure more of the younger generation.