Everything you need to know about… How children are covered on critical illness policies
Raising children is one of the greatest joys in life but also one of the biggest responsibilities. Not only do you financially support your children, you also need to give them your time. Nobody wants to think about doing these things in the context of their children having a critical illness, but sadly it can happen. Children’s critical-illness cover removes some of the burden on parents in this situation by helping to meet the family’s financial needs so they can completely focus on the child.
So, whether your clients are planning to have children, legally adopt, or they already have children, it’s important that they understand the basics of children’s critical-illness cover, and the different approaches insurers have in this area.
Flexibility
The first thing to note about children’s critical-illness cover is that some insurers provide it as standard on their adult policies, some offer it as standard but have an optional upgrade providing enhanced cover and others structure it as an optional add on.
The reason for this is that views differ as to whether features that some people will not use should be included as standard (and so included in the price) or whether people should only pay for what they use.
While the different approaches mean the market offers something for those who have or want children and those who do not, it does make comparing the cost of plans more complicated. Some insurers will have several options and others may not include children’s cover in their standard quotes.
Keeping an eye on children’s ages throughout the policy is also important as the maximum age at which children are covered varies between providers. Where clients pay additional or increased premium for children’s cover, all insurers allow this option to be removed when children are too old to qualify, which will reduce the premiums.
In this article we look at how flexible children’s critical illness cover in terms of how insurers provide cover and how long children are covered for.
Eligibility
Children’s critical-illness cover is a difficult issue for advisers to bring up with their clients because it is not easy for clients to face the possibility of their children needing it. Advisers know that clients would welcome a lump sum if they needed to make a children’s claim on their CI policies, as it would help to make life a bit easier at a difficult time.
Imagine wanting to take time off work to spend with a critically ill child but worrying about the extent of your employer’s policy on compassionate leave and about paying the bills? Broaching the ‘what ifs?’ in this context needs tact and sensitivity.
However, brushing up on the eligibility criteria of the children’s element of suitable critical-illness plans can help put clients at ease and prevent potentially upsetting conversations from being dragged out for longer than necessary.
Where an adviser has seen one insurer’s approach to children’s critical illness cover and is familiar with that, it doesn’t mean they have seen them all. There will be plenty of differences between plans, just as there are differences between the families they cover.
To ensure the right plan is chosen to meet the needs of particular clients and their children, advisers will need understand the eligibility criteria. In this insight we aim to shine a light on the different categories that children requiring cover will fall under.
Parental support when child is hospitalised
For any parent, witnessing their child suffering in hospital must rank highly among the more stressful times in their entire life. Feelings of helplessness, fear and anxiety will be soaring. The need to focus on the child’s support and care is paramount, leaving little headspace for worrying about financial matters, yet the costs – both direct and indirect – can mount up.
A look across the life insurers whose critical illness insurance plans will offer an additional feature of child hospitalisation benefit shows that four providers offer this
All four offer the policy feature as standard, rather than a chargeable extra and as such there are no additional costs, however there are some notable differences in the circumstances in which a claim can be made.
However, all the providers have their individual strengths, so having a conversation with the client will help to determine which is most suited to their needs.
In this article, we look at which providers help support parents financially if their child is hospitalised
Funeral cover
The range of emotions felt by a client if they lose a child to a critical illness will make it difficult for them to focus on the practicalities of everyday life, let alone paying for the funeral. Discovering the cost of burial or cremation is more than they can easily afford would be devastating, so many insurers now provide funeral cover for the children of the life assured.
Funeral cover is similar to life insurance in that the policyholder receives a benefit to go towards funeral costs. However, the amount that insurers will pay varies and they do have exclusions, so it is important to choose carefully.
In this article, we look at which providers offer a funeral benefit to contribute towards funeral expenses for children
Child conversion options
Advisers need a new ‘way in’ to having a conversation about critical-illness cover with younger people. Relying on the traditional ‘trigger events’ such as buying a house and having children is no longer sufficient because these milestones are increasingly happening later in life.
According to the Office of National Statistics, the average age of first-time buyers has increased to 34, while the average age of first-time mothers has risen to 29. The implications of this for protection are clear – even if young people are covered by the children’s element of their parents’ critical illness policies for as long as they can, waiting for those big life events will result in a gap in cover for those who still have rent and living expenses to pay if the worst comes to the worst. In this article we consider how insurers help younger clients obtain critical illness cover
Some insurers help advisers address young people’s protection needs earlier by making child conversion options available on the children’s element of adult critical-illness policies.
These options allow a qualifying child of the life assured to take out their own policy without medical underwriting when they’ve outgrown a parent’s policy. This gives advisers a chance to discuss the protection needs of their clients’ children at an early stage, ideally bringing about a seamless transition to their own adult policy.
In this article we examine what providers offer and how they compare
