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Group Critical Insurance: The Good, The Bad and The Pricing

Group Critical Insurance: The Good, The Bad And The Pricing

Group Critical illness, also known as employee critical illness cover or as the ‘dreaded disease policy’ in other parts of the world, is one of the fastest growing employee benefits in the market.

Currently, it only holds a minimal market share compared to the other insurances, yet is rapidly growing to today. In this guide we will have a look at why that may be.

The Good

Group Critical illness cover supports employees with a tax-free lump sum if diagnosed with a critical illness or undergo an operation, for any of the covered illnesses or operations as set out in the policy.

  •  Employees will be provided with a tax-free lump sum payment to help with funding treatment, supported living, changes required to a lived-in property or however they wish.
  •  Insurers offer a wide range of enhancements for the employer to choose from but usually a minimum of 12 core illnesses are covered by every policy.
  •  All providers now will include children’s cover in the policy, mirroring their parents’ benefit.
  •  Additional support services included in the price of the policy, such as; cancer support, second medical opinions and counselling sessions to help coming to terms with a diagnosis.

Group Critical illness is currently the least popular of the employee benefit insurances (by market share), but we are seeing rapid growth in this area with the number of members covered currently sitting at 571,800; totalling £37.3 billion.

We will continue to see this area grow over the coming years with the sobering fact that 1 in 2 people in the UK will be diagnosed with cancer at some point in their lifetime. 

This leads us to understand why we will of course continue to see further focus on this area of the employee benefits arena and marketplace.

The Bad

As with all products at their growing stage, critical illness has a lot of work to do and is still an evolving product. 

Our team at Hooray have been in discussions with major insurers on how we can look to enhance this product to help provide the best cover to the UK marketplace.

Our main (well only) bug bear against a group critical illness policy, is with the survival period that insurers impose within their terms and conditions. 

So, for example if an employee is diagnosed with terminal cancer, they would have to survive for a set time (usually 14 days) before they can get the benefit payout.

Now we understand that the policy is designed to support people surviving or living with a critical condition and group life insurance is there to support families for death benefits. 

Our personal view is that insurers have a duty of care to pay on the diagnosis of a critical illness and waive any survival periods as this seems an unnecessary exclusion, in our humble opinion.             

If we really consider how many people this will impact, it is minimal, but for those that get diagnosed with a terminal illness and then pass away in the survival period, it is going to be absolutely devastating to their families and will of course feelings of being cheated by insurance companies will add to a negative view that consumers have of the insurance industry.

Hooray Health & Protection will continue to lobby this to the market and will update this guide with any progress as we see the product continue to grow.

The Pricing

Due to the current small size of the Group Critical Illness market, there is no way to provide an average costing of a general policy.

However, there are of course factors which will impact pricing from client to client which are; (in no particular order) the average age of the company’s employees, location, occupations, any long-term absentees, previous claims history and the levels of cover chosen.

Our main pricing tip for group critical illness would be to declare all insurance policies you hold when reviewing your group critical illness insurance, as certain insurers who offer all three policies can provide multi product discounts. 

So if you have Group LifeGroup Income Protection or Group Medical Insurance ensure to let your broker know but remember they will also use the existing schemes to get a better understanding of your company’s ‘risk profile’.

If critical illness cover is something you’ve been thinking of, then don’t delay and call us on 01273 222805, or email [email protected]

Charlie Cousins

Founder and Director of Hooray Health & Protection, Charlie Cousins has enjoyed a career in the insurance and financial services industry spanning over the last ten years.

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