"This research, which we sponsored iPipeline to conduct, has some important market insights."
- Jacqui Gillies, Marketing & Proposition Director at Guardian
Of those surveyed (345 advisers via iPipeline), almost three quarters (74%) thought customers would pay more for Life Insurance with an enhanced terminal illness definition. Of that percentage, 45% thought customers would pay between 10-25% more whilst a small minority (4%) said they’d pay over 25% more.
When asked if they felt confident explaining the difference between an enhanced and industry-standard definition, 90% said they could confidently define these terms. However, 52% of advisers thought their customers didn’t yet understand the difference.
This research follows the Financial Conduct Authority’s (FCA) review last year into terminal illness benefits offered by the market. This review concluded that there was scope for the industry to consider offering an enhanced definition – acknowledging that an enhanced definition would likely come at a greater cost.
Currently, the standard industry terminal illness definition pays out when a policyholder is expected to survive for less than twelve months. To pay out, these policies need confirmation of the customer’s life expectancy prognosis. Meanwhile, an enhanced terminal illness definition provides greater opportunity for customers to claim if they’re diagnosed with a terminal illness.
Guardian Financial Services’ (Guardian) Life Protection terminal illness definition allows customers to claim if they’re diagnosed with incurable stage 4 cancer, moto neurone disease, Parkinson-Plus syndrome, and Creutzfeldt Jakob disease – regardless of life expectancy. It also pays out on other diagnoses if a policyholder is expected to survive for less than twelve months, as per the industry standard.
The difference between industry standard and enhanced definitions is evident in Guardian’s first claims report which revealed that five of the fourteen cancer-related claims from 2023 wouldn’t have been paid at the time of initial claim under an industry standard ‘twelve months to live’ definition.
READ MORE: Guardian publishes first-ever claims report since launching in 2018
“This research, which we sponsored iPipeline to conduct, has some important market insights. We’re pleased to see most advisers think customers value the enhanced terminal illness definition and would be willing to pay more for it. That’s good to know as it’s a more expensive definition to offer,” explained Jacqui Gillies, Marketing & Proposition Director at Guardian.
She said: “We’re also pleased the majority (90%) of advisers said they felt confident explaining the difference between the two definitions on offer. There will always be the most price-conscious customer, who can’t or chooses not to pay more for an enhanced definition. But the most important thing is that advisers can confidently position the difference so their customers can make an informed choice.”
Ian Teague, Senior Vice-President & Managing Director, UK & Europe, at iPipeline, added “We’re pleased to conduct this research for Guardian, tapping into adviser’s insights. It’s great to see that advisers & customers value the choice of terminal illness definitions, with 90% of advisers confident in explaining the differences. We’re always happy to collaborate with product providers to better understand and meet the needs of advisers and their customers.”
