As part of IFA Magazine’s Friday Focus this week, we look into the crucial yet often underestimated role of Critical Illness insurance. In this exclusive piece from Scott Aitken, Mortgage & Protection Adviser for Aitken Financial Services delves into why this cover remains a cornerstone of true financial resilience. Despite affecting around one in two people during their lifetime, critical illness can still be perceived as being too often sidelined.
Scott explores why it deserves equal footing in every protection conversation, how advisers can better balance affordability with adequate cover, and why real client outcomes prove its life-changing impact.
Around 1 in 2 people will be impacted by ‘Critical Illness’ at some point in their life. That alone makes Critical Illness cover an essential part of protection planning. It is sometime forgotten due to overlap between Life cover and Income Protection cover, or more simply, client budget.
We all know that Critical Illness can provide a lump sum payment that can help ease the financial burden at a time of great distress and worry for clients. However, I still see lots of advisers trying to do amounts to pay off mortgages. Whilst that is great in theory, it can blow the clients budget out of the water, meaning that they do not proceed at all. Based on Royal London’s own stats. Only 33% of people with a mortgage, have Critical Illness cover. As advisers we could focus on writing smaller lump sums to cover a year or two salary or other amounts that suit the client’s needs and budget. There is also the option to write Critical illness as a monthly benefit, which is often forgotten about. Ultimately, we need to approach all protection planning conversations with clients holistically and ensure we discuss all options with our clients.
In recent years there has been a push by providers to flexible menu plans, that allow us to give clients options on various levels or critical illness cover. From basic cover through to comprehensive cover. Policies that include children’s cover and ones that don’t. This offers more choice and ways to better utilise the client’s budget, but can also cause confusion for clients, and can lead to lower quality cover being recommended if the adviser is not prepared to have a deeper conversation around benefits vs price. What is a harder conversation to have, one where you recommend your client to pay a little extra to get more comprehensive cover, or one where you are telling your ill client that they cannot claim on their policy because you only recommended a cheaper one?
Providers are continuing to explore how they can build better product choice for clients and we are seeing that from providers offering different ways to build out critical illness policies with the flexible ‘menu’ approach, to them also having optional add ones like fracture cover or other benefits. Affordability and client understanding falls on the advisers. We need to ensure we are having a protection conversation with every client we speak to and make sure they understand the need for cover, along with the types of cover they have available to them. The only way to do that is by being confident in what we are talking about.
Something that is overlooked can be the impact of a Critical Illness and the difference a policy can make to a client. Recently I have a 26 year old client diagnosed with cancer. Thankfully she had taken my recommendation and after the claims process she received a payout and was able to clear her mortgage and treat herself to her dream car. More than that she has made an excellent recovery free from the financial stress of paying her mortgage whilst off work for a long period as she was able to concentrate on recovery. On the flip side, my own sister had a cancer diagnoses in her early 20s and did not have Critical Illness cover as she didn’t see a need due to not having a mortgage. This meant she had to take time off work unpaid and eventually had to cut that short and return to work when she should have been focussing on resting and recovery. If you ask any client who has had a Critical Illness claim, the last thing they will mention is the monthly premium.
Overall, Critical Illness is a vitally important part of the protection conversation and should not be overlooked. In an ideal world a client should have this cover alongside their life cover and income protection to ensure they are as financially resilient as possible.
