Insurers have competed to improve payment conditions, ages covered and specific conditions for children over the years
One notable change in recent years is that children’s critical illness cover has been receiving the same attention to detail as adult cover.
Typically children’s claims average around 4% of total claims but this may be underestimating the ‘true’ position. AIG’s figures may be more indicative of reality because as a ‘new’ insurer it carries no burden of legacy plans where the child cover was poor, non-existent or where the children have subsequently grown into adults and no longer qualify. Of course, it also helps that its child cover is of a high quality.
This table shows the 2017 child cover claim stats for those insurers that reveal this information:
Child specific conditions
The real kickstart for improving child cover came from Friends Life, which in September 2013 introduced five child specific conditions – cerebral palsy, cystic fibrosis, hydrocephalus, muscular dystrophy and spina bifida. The stakes were raised by AIG in December 2015 when it included these as well as type 1 diabetes and Down’s syndrome.
Since then there have been flurries of additions, in January of this year Royal London introduced all of the aforementioned conditions as well as craniosynostosis, Edward’s syndrome, osteogenesis imperfecta, Patau syndrome.
AIG and Old Mutual have since responded by adding some or all of these. Aviva also offers an extra care cover option where twelve conditions provide a fixed payment of £50,000.
The level of payments has similarly altered. When Legal & General introduced child cover in July 1997 it paid a maximum £15,000. LV= paid up to £25,000 when it absorbed the Permanent Insurance Co in June 2001 and this £25,000 maximum remained until earlier this year.
Today we have AIG offering the lower of £35,000 or 50% of the parents cover, Royal London the lower of £50,000 or 50% and new entrant Guardian allowing any level of child cover between £10,000 and £100,000.
Legal & General were the first to introduce a child death benefit in April 2013, paying £4,000. Others followed with sums of £5,000 until Canada Life upped the ante to £10,000 in August 2015, a figure since followed by Guardian and AIG.
Ages covered & survival periods
Twenty years back the age range was far more restrictive than today. Until 2007 Aviva covered children from age one till 18 whilst between 1995-1999 Zurich’s limits were from age three to 17 years.
Nowadays many insurers cover children from birth until the 22nd birthday with recent entrant Guardian extending until the 23rd birthday (if in full-time education). This also involves them including congenital and familial conditions, many of which are diagnosed at or shortly after birth.
The survival period from diagnosis has also reduced. Legal & General requires a 10 day survival period although it insisted on 28 days until October 2010. Most operate 10 or 14 day period although Beagle Street continues to use 30 days. LV= bucks the trend by not applying any survival period.
Additional payment conditions
Most insurers include additional payment conditions for children but there are exceptions. Aviva’s child upgrade and L&G’s extra only include early stage prostate cancer and less advanced cancer of the breast whereas AIG includes 38 additional payment conditions and Zurich’s Select plan offers 45.
The levels of payment vary as well – AIG pays the lower of £35,000 or 50% of the sum insured, Aegon pays lower of £25,000 or 50% of the sum insured. Most others limit payments to £25,000/25%. Beagle Street uses the lower of £20,000 and 20% whilst with LV= it is 50% of the adult payment which means some conditions pay £12,500/12.5% and others £6,250/6.25%.
Whilst some insurers appear to cover more conditions than others it is as well to remember that the CIC world is an unusual creature where some insurers consolidate conditions within all-embracing headings and others list them separately. Simply counting condition numbers does not work.