Zurich unveils new modular critical illness proposition for bespoke cover

The new product, launching today (7 September), comprises a modular design with three levels of cover aimed at specific consumer needs, alongside an updated children’s cover package that has been decoupled from adult cover.

The insurer has also introduced a “market first” optional pregnancy and early childhood module that policyholders can add or remove for those planning to start, or add to, their family.

Speaking to COVER about the launch, senior proposition innovation manager, Tim Lewis, highlights that alongside the updates to the Association of British Insurers’ (ABI) guide on critical illness definitions, the product is “probably the first” major product launch since the implementation of the Consumer Duty.

“The structure is founded in customer need and improving customer outcomes; as a result, it beautifully complies with the Consumer Duty principles,” he said.

“Proposition development always starts and ends with the customer and this is no different.”

Zurich’s proposition now incorporates three levels of cover: Critical Illness, Critical Illness Enhanced, and a new tier, Critical Illness Enhanced Plus.

Critical Illness is the standard level of cover which has been revised to include updated definitions for brain injury, cardiomyopathy, pulmonary hypertension and less advanced cancer of the prostate.

Zurich has also updated its cancer, heart attack and dementia cover in line with ABI guidelines.

Critical Illness Enhanced, formerly known as ‘Select’, has been enhanced to include cover for all neurodegenerative conditions, all bowel diseases, accidental hospitalisation, permanent pacemaker insertion and severe sepsis.

It also offers improved cover for a range of conditions including mental illness, coronary angioplasty and drug resistant epilepsy.

 New tier

The newly added Critical Illness Enhanced Plus level of cover has been designed for “clients who want market leading cover and pay-out levels.”

The maximum payout for additional payment conditions has been doubled at this level from £25,000 to £50,000, while the maximum age for the uplift benefit has also been raised from 50 to 55.

It also includes additional uplift benefits providing extra financial protection for the most severe conditions, the maximum payout of which has been improved from £100,000 to £200,000.

“The critical illness market is really dynamic and competitive. We recognised that whilst our current product has been holding its own in most areas, it could do with a little bit of upgrading and refreshing, just to make sure we were keeping pace,” Lewis commented.

Children’s cover

The updated proposition also includes the option to add cover for children to a Personal Protection policy, including on life cover, in two formats.

‘Children’s Cover’ includes children’s critical illness that pays the same sum for all named conditions. It also now includes a new hospital stay benefit which provides a contribution to the out-of-pocket expenses during a prolonged stay in hospital. Cover for child death is also included.

The option can be added or removed from adult cover at any time, with parents and guardians able to choose a level of cover that suits their needs and budget, from £10,000 to £100,000.

Meanwhile, ‘Children’s Enhanced Cover’ offers the same level of cover as the adult Critical Illness Enhanced option, in addition to a new child permanent dependence benefit, which pays out if the child is rendered unable to permanently live independently.

Lewis says that the new children’s offering has “ripped up the rules” of cover in the wider protection marketplace, as currently consumers that want the “best children’s coverage in the market typically have to buy the best version of that product as well.”

Allowing for an optional approach means advisers and consumers can create the most suitable package of cover themselves, he says.

This was a key consideration behind the introduction of the pregnancy and early childhood cover, an optional short-term solution aimed specifically at those planning to have children in the future, which can be removed once it is no longer needed.

The cover also provides critical illness protection for cerebral palsy, craniosynostosis, cystic fibrosis, Down’s syndrome, Edward’s syndrome, hydrocephalus, muscular dystrophy, osteogenesis imperfecta, Patau syndrome, and spina bifida.

It can be added at any point during the policy term and carries improved cover for pregnancy complications including late-stage miscarriage, child death cover including cover for still births, and new cover for birth defects.

In what Zurich states is a “market first”, this cover also includes a contribution of £50 per night to the unexpected costs of hospital stays due to premature births.

“Advisers can craft relevant, bespoke solutions for every client that comes through their door which matches their specific needs, wants and budget, paying for only cover that they need that point of sale,” Lewis explains.

The expert view

Alan Lakey, managing director of CIExpert, tells COVER:

“Zurich has made numerous changes.  Like AIG they have introduced a wide-ranging neurological condition termed ‘neurodegenerative Disorders’ that encompasses most permanent neurological conditions that otherwise would have fallen between the cracks due to not being specifically named.  As you will know, we have been arguing for this type of change for around 10 years.

“They have used modules for children’s critical illness where congenital conditions, birth defects and pregnancy complications can be added and removed.  This forms an expensive part of children’s cover so those who plan no further children, and whose children are over age 7, are able to remove this aspect of the plan and reduce the monthly outlay.  Currently policyholders pay a cost for congenital condition coverage even when their children are older and statistically unlikely to undergo a diagnosis.

“Another important improvement is the benefit uplift.  This is where those taking out the Enhanced Plus product will receive a double payment (up to a max £200,000) if diagnosed with one of 16 conditions prior to age 55. This reflects the reality that such a diagnosis before age 55 can have a catastrophic impact on finances.  The conditions are;

• Blindness
• Brain injury
• Deafness
• Dementia
• Heart failure
• Kidney failure
• Liver failure
• Loss of two limbs
• Loss of speech
• Major organ transplant
• Motor neurone disease
• Neurodegenerative disorders
• Paralysis of two limbs
• Parkinson plus syndrome
• Parkinson’s disease
• Respiratory disorders