The children’s element of critical illness cover needs to be handled with care by advisers and providers.
Nobody wants to think about themselves or their family becoming critically ill, least of all their children. However, sadly, there is sometimes no escaping it, which is why children’s cover has been a part of adult critical illness policies for more than 20 years.
Claims on the children’s element of CI cover are relatively low, with figures from CIExpert putting the industry average at around 3.5 per cent.
Some providers have recently revamped this element of their CI products but, given the sensitive nature of this area, to what extent is the industry marketing the features of this cover? And should it play a bigger role among advisers in driving sales of adult policies?
Peace of mind
In January, Royal London added flexible options and enhancements to its children’s CI cover, increasing the maximum payout for a valid children’s claim to 50 per cent of the sum assured up to £50,000.
“We try to promote all the different parts of the proposition as important and we have promoted the enhancements we have made to children’s cover, but it does need careful handling,” says the firm’s proposition lead, Jennifer Gilchrist.
“It’s very emotional getting into this type of detail. You want to make sure you can give people peace of mind so they don’t have to worry about certain things if such a dreadful event were to happen. We are not trying to scaremonger — the number of claims compared to the number of policies taken out is small — but each one is the most emotive time for customers.”
Scottish Widows protection specialist Johnny Timpson points out the support offered to affected parents is both financial and practical, often including specialist services and agencies. With children’s CI and its associated RedArc support being central to the Scottish Widows Protect product, the provider does not shy away from actively promoting it.
Timpson says:“It offers valuable support for parents with dependent children, especially so given NHS developments that have led to the creation of centres of paediatric medical excellence,” he says.
“These centres can often be some distance from the family home and referral to them can, and all too often does, result in families facing additional and significant costs due to travel and childcare — often needed outside standard hours. This is before loss of income if a parent is staying in hospital with the child is taken into account.”
Commentators agree the overall message around children’s cover needs to be positive, as over-emphasising the doom and gloom around certain conditions might act to dissuade some people.
For advisers, the skill is in highlighting all the benefits without scaring clients.
London & Country Mortgages head of protection Lucy Brown says: “It’s important to be open about discussing children’s CI cover as a feature of the adult’s contract. While it’s hard to think about, we need to accept that a child being seriously ill is likely to impact a family as much as an adult being ill.
“Carers would need time off work to be with their children. Depending on the nature of the illness, this could affect someone’s ability to work or be at home caring for other children.”
She adds: “Advisers should absolutely make customers aware about children’s CI as a feature, and discuss the fact there are now options to ‘upgrade’ children’s cover as you can with adult’s. It’s about giving customers a choice.”
Brown adds some people may be able to relate more to protecting their children than themselves.
“If this is an alternative way for advisers to engage with their clients, and get them to understand the protection they so often need, then that has to be a good thing,” she says.
CIExpert director Alan Lakey says it’s a tricky subject for advisers, because a conversation around children’s cover could provide peace of mind to some people, but could upset others and end up being counter-productive. He tends to tackle this by focusing on adult cover and referring to child cover as a further benefit.
“Perhaps there is no one right way to do it. It comes down to the individual and how that individual decides they want to introduce child cover,” he says. “But there is no denying it is very important.”