Critical illness insurance in the UK
Critical illness insurance had initially been a little slow to be known in the UK. More precisely, it took around five to ten years years. However, the English life industry believes that critical illness insurance may adopt a similar trend where it had been a success, for example USA. As a matter of fact, the boost in critical illness sales may be expected to occur imminently.
Contrary to the USA, where probably most critical illness sales come from the Direct Sales Forces (DSF), in the UK, sales most likely come from the agency field force. The agency field force may comprise of independent life insurance brokers, associates and agents. Group critical illness or employer sponsored critical illness may be becoming more popular than individual critical illness in the UK. Some critical illness sales may have also been made through the worksite marketing. As the English become friendlier to critical illness insurance, companies believe that sales may somehow be made by direct response programmes in the future. Also, the internet could be used to target possible customers as the UK Industry had started to become mature.
According to Munich Re, 1990 – 2000, there had not been a specific market for critical illness sales in the UK. Policy holders may vary from young to old, males to females and small business owners to professionals. However, a trend had been noted. People who earn more money tend to buy critical illness cover than those who earn less. The reason behind may be that critical illness policies could be quite expensive. The high price of critical illness cover could be because the policy may stand for lifetime. Additionally, women have been recorded to buy most critical illness policies than life insurance policies also known as life policies. This may sum up to 30 to 40 percent of women who may possess critical illness policies. One fact that could explain this may be that many business owners in the UK could be women.
Moreover, when critical illness insurance was initially introduced, it was a standalone plan. Gradually, it was combined with disability and life insurance. Actually, insurers may be giving a new look to the critical illness cover policy design. This may aim at giving more benefits to potential customers. They had chosen to accelerate the death benefit of a life policy upon diagnosis of a critical illness. Other companies might also be choosing to give limited critical illness coverage on a guaranteed issue basis. Furthermore, Return of Premium (ROP) was another tactic used by insurers in the UK. Having this on a critical illness policy meant competition with other companies as it probably represented an advantage.
Some companies had the ROP automatically integrated in their policies as a rider benefit. On the other hand, other companies refunded the premiums if the policyholder stayed in good health until the end of the policy. Other firms provided their customers with the ROP on lapse benefit which refunded the premiums upon ceasing the critical illness policy. Some people view this option as misleading as companies may be in fact encouraging their policyholders to terminate their policy prematurely.
The adoption of critical illness insurance may have been slow to be adopted in the UK. But as awareness increases among people, it could end up becoming as popular as in the USA.
