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what are the limits for childrens critical illness cover?

what are the limits for childrens critical illness cover?

In reading this article you will understand:

  • The age limits that apply to children’s critical illness cover and how providers differ
  • What providers will pay for a child critical illness claim and what limits apply
  • Which providers can extend their support to include worldwide treatment and how that works.

Starting a family is a classic trigger for a protection conversation. But this something that most couples keeps to themselves, at least initially, given the time it can take and the potential problems that might occur along the way. So, it is unlikely that advisers will be aware that a client’s circumstances are changing until it happens.

Of course, general conversations with clients about whether they plan to have children or not can steer protection advisers in the right direction before there are any new additions to their families. But then the adviser will have some potentially tricky decisions to make, as there are cost implications if they obtain CI cover for their clients which includes children’s cover (especially if an enhanced child cover option is available). In this article we take a look at children’s critical illness cover

Some insurers automatically include childrens cover within their critical illness plans. So while it is a great way to make CI plans appealing to parents and would-be parents, it also means that childless clients and those with adult children who are too old to qualify end up paying ‘bundled’ costs for something they will not use.

In contrast, some providers provide children’s CI cover as an optional extra for those who want it. Others strive for the best of both worlds by offering a standard level of children’s CI to everyone, with an optional upgrade at an additional cost for those who want enhanced benefits.

Whatever a client’s personal circumstances, it is important that advisers understand the level of cover being provided and whether enhanced cover could be bought at an additional cost.

What age do critical illness plans cover children from and to?

When children’s critical illness is included in a plan, insurers will set a minimum and maximum age between which the children of the life assured will be covered to. The maximum ages are:

Looking at our chart, the first thing to note is that the maximum age at which a child can be covered will depend on whether the child is in full-time education or not. Age 23 is the highest limit for children who are in full-time education and is offered by Guardian, LV=, Royal London and VitalityLife.

Where the child is no longer in full-time education, Guardian, and LV= retain their age 23 limit, while Royal London’s limit reduces to 21 and VitalityLife’s drops even further to 18.

At the other end of the age spectrum, insurers will cover babies either from birth or at 30 days’ old.

From birth is much more common, but it is interesting to see that Aviva and Legal & General has a foot in both camps, reflecting differences in their basic and upgraded cover.

How much will be paid?

When a child is covered on a parent’s CI policy, the amount that is paid on a successful claim is most often calculated as a percentage of the policy’s sum assured up to a maximum fixed monetary amount. There are some exceptions to this however as some insurers will pay differeing amounts depending on whether the claim is for a full payment or additional payment condition. AIG’s YourLife plan, Guardian and Vitality are also different as all offer childrens cover essentially as a separate policy to the parents cover as can be seen below:

Product
Amount Paid for a child’s claim
AIG CiC Start
50% of sum assured up to £35,000
AIG YourLife Plan
AIG’s children’s cover is essentially a separate policy to the adult cover and will pay £50k for Group 1 conditions and £25k for Group 2 conditions
Aviva
50% of sum assured up to £25,000
Aviva Upgraded Child

£25,000

Aviva will pay £50,000 if the child meets the definition of one of their child extra care cover conditions

Canada Life

Full Payment condition = 50% of sum assured up to £25,000

Additional Payment condition = 25% of sum assured up to £25,000

Guardian
Guardians children’s cover is essentially a separate policy to the adult cover and can have a sum assured of between £10,000 and £100,000. Guardian will pay 100% of the child’s sum assured for a full payment conditions and 25% of the child’s sum assured for an additional payment condition
Legal & General
50% of sum assured up to £25,000
Legal & General CCIx
50% of sum assured up to £30,000
LV=
50% of sum assured up to £25,000
LV= Enhanced Children’s CI
50% of sum assured up to £35,000
Royal London

Full Payment condition = 50% of sum assured up to £25,000

Children are not covered for additional payment conditions

Royal London Enhanced Child CI

Full Payment condition = 50% of sum assured up to £50,000

Additional Payment condition = 25% of sum assured up to £25,000

Scottish Widows
50% of sum assured up to £30,000
Vitality PPP
Vitality’s children’s cover is essentially a separate policy to the adult cover and can have a sum assured of between £10,000 and £100,000. Vitality will pay between 100% and 5% of the child’s sum assured depending on the severity of the condition if SIC plus is included. If core cover is taken they will pay between 100% and 15% depending on the severity of the condition
Zurich (Both Core & Select)

Full Payment condition = 50% of sum assured up to £25,000

Additional Payment condition = 25% of sum assured up to £25,000

 

As such, the actual amount paid will depend on the sum assured at point of claim for all insurers except AIG’s YourLife Plan, Guardian and Vitality. Below we highlight the actual amount that would be paid across different sums assured.

Where a critically ill child needs to be treated abroad, AIG and Zurich will both double the amount they will pay, whilst if Global Treatment is included Aviva will cover the costs of the treatment abroad (see more details on this here).

Overall, there are plenty of companies that are doing well in certain areas but none ticks every single box in terms of the criteria we have considered. Guardian and LV= have the highest maximum age limits and apply these regardless of whether a child is in full-time education or not. Clients whose children might not go to college or university will appreciate this, as their children will still be eligible for cover.

Both AIG’s YourLife plan and the Aviva Upgraded Child plan are likely to pay more on a successful child claim regardless of the parents’ sum assured, and this is only matched at higher sums assured by Royal London’s Enhanced Child cover. With a maximum sum assured of £100,000 and no dependency on the parents’ sum assured, both Vitality and Guardian ultimately offer the highest payouts for those willing to pay for more cover.

Things to reflect on for CPD:

  • What three things in this article have been most useful to you and how will you use that learning with your clients?
  • Would the difference between cover from birth or cover from 30 days sway your choice of provider? Explain why.
  • Consider your typical client demographic. If you had written this article which providers would you call out as strong and why?

About The Author

Adam Higgs

Adam leads Protection Guru's detailed protection research and benchmarking of both product and operation features provided by insurers and has a vast knowledge of the protection market. He has been instrumental in building the protection comparison service Quality Analyser and maintaining the data to enable adviser to quickly and easily compare protection products based on qualitative measures. He also works with adviser firms to help in panel reviews and with insurers to help them understand the shape of the market, their strengths and the areas that could be improved in their products. In his spare time and when not spending time with his wife and two children, Adam is a keen Arsenal fan and enjoys hacking his way around a golf course.

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