THE HOME OF THE PROFESSIONAL ADVISER Should Critical Illness be
used to protect against Incapacity?
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A kangaroo can jump higher than the average house 80% of road
accidents happen within 25 miles of your house 99% of smokers have
stopped smoking Once you have paid off your mortgage you are
financially secure
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Protection industry paid out 3.1billion in 2013 LV= enhances
Critical Illness cover Aviva improves Critical Illness cover to
boost heart attack payouts Aegon improves critical-illness plan
Insurer paid out 91 per cent of critical illness claims Ageas
reveals Critical Illness claims stats for first time Critically ill
children need to be covered 6 million homes at risk as owners do
not have any protection insurance Source: Money Marketing online,
2014 In the news:
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Critical Illness Its a 250m per annum contract but, is it
appropriate to protect against incapacity?
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Can Critical Illness be used to protect against Incapacity?
Background How do you choose the Sum Assured? Case studies Tools to
help The solution
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Created in 1983, and bought to the UK in 1985: Initially
covered: Cancer Coronary bypass surgery Stroke Heart Attack Kidney
Failure Major Organ Transplant Can Critical Illness be used to
protect against Incapacity? By 2000, 10% of the working population
covered 2002 2004 ABI standardised conditions More recently ABI +
Partial payments Double payments The history of Critical
Illness
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Originally designed to: pay for the costs of the care and
treatment; pay for recuperation aids; replace any lost income due
to a decreasing ability to earn; or even fund for a change in
lifestyle Can Critical Illness be used to protect against
Incapacity? So, why are so many policies sold on the basis that
they can pay off the mortgage?
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Can Critical Illness be used to protect against Incapacity?
Setting the Sum Assured Depression / anxiety Accidents
Musculo-skeletal Heart attack Stroke Multiple Sclerosis Benign
brain tumour Cancer
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Can Critical Illness be used to protect against Incapacity?
Setting the level of cover Family circumstances/ Stage of Life
Maximum to Budget Enough to cover outgoings To death For a limited
period 1 x 2 years Pay for treatments Client sets the level
Outstanding mortgage Age Length of protection needed Outgoings
Clients concerns Budget
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Imagine S ituation P roblem I mplication N eed
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Setting the Sum Assured The Cost of Multiple Sclerosis
Projected Costs Wheel Chair400 Ramp100 Special Bed1,000 Converted
Bedroom3,000 Carer1,000 Adapted Car5,000 Chair Lift6,000 Walking
Stick10 Total12,510 Actual Costs Up to 800 Up to 500 Up to 1000 Up
to 10,000 Up to 11,000 pa Av. 19,500 Up to 6000 Up to 50 37,850
+
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Mortgage Strategy, 15 August 2014 Can Critical Illness be used
to protect against Incapacity? 50% of households spend over half
their income on housing costs Case Study Married couple 2,000
outgoings per month 150,000 mortgage costing 1,000 pm Mortgage for
20 years Pre Advice
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Mortgage Strategy, 15 August 2014 Can Critical Illness be used
to protect against Incapacity? 50% of households spend over half
their income on housing costs Case Study Married couple 2,000
outgoings per month 150,000 mortgage costing 1,000 pm Mortgage for
20 years Recommended 150,000 Life & CIC - 80pm Pre Advice
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Post advice.. What would you recommend?
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What would have protected them? Income Protection Critical
Illness Best of both Separate covers Buy back Combination of
covers
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1,666 1,041 Critical illness and life Mr Jones Income
Protection Mrs Jones Income Protection Price 127.47 1,666* 1,041*
91.37 1,000* 80.32 0 80.63 * Budget version 165,000 (level) 165,000
decreasing
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Dont need it? Help to visualise
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Can Critical Illness be used to protect against Incapacity? Use
to tools available to help Bespoke cover to clients Make them
understand using SPIN Change the cover to suit the clients journey:
GIOs, Buyback Combination of covers Dont forget their
income!!!
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Sometimes we miss the most obvious solution!
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Handset Question Would you like us to send you details about
our Risk Reality Calculator Yes No
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Handset Question Has this presentation challenged how you
currently protect your clients against Incapacity? Yes No
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Liverpool Victoria Friendly Society Limited: County Gates,
Bournemouth BH1 2NF. LV= and Liverpool Victoria are registered
trade marks of Liverpool Victoria Friendly Society Limited (LVFS)
and LV= and LV= Liverpool Victoria are trading styles of the
Liverpool Victoria group of companies. LVFS is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority, register
number 110035. Registered address: County Gates, Bournemouth BH1
2NF. Telephone: 01202 292333. 21444587 10/14 Not to be used after
31/12/2014
