Guardians new product range will stimulate even more competition in the protection market, for the benefit of consumers and advisers. This summary explores key issues to consider when exploring their products.
Amid much market anticipation, the day has finally arrived. The company will soft launch their products into the market today providing access to a select number of adviser firms before a whole of market launch later this summer.
Since announcing their intentions to enter the UK market as an “insurance challenger” in June last year, Guardian have come a long way. So too however, has the market in general with a number of insurers improving the cover they provide. So how do Guardian fit into the landscape and what are they doing to live up to the “Life. Made Better” promise?
Throughout our discussions with Guardian over the last year, it has been clear that they want to deliver comprehensive products that are simple to understand and buy. Whilst this is easy to say it is far from easy to deliver, however having read through their terms and conditions it has been refreshing to see the use of plain English in their explanations.
Finance & Technology Research Centre use a panel of medical practitioners chaired by Dr Adam Hazel of Cooper Health in Harley Street to maintain a medical analysis
e of insurers critical illness wordings. Dr Hazell is very positive about Guardian’s approach stating “Having reviewed the critical illness wordings written by Guardian, they have clearly made a significant effort to keep them simple and clear to avoid any unnecessary ambiguity. In this regard, they are certainly leading the field when compared to their competitors.”
The critical illness market has undergone a number of changes over the last 18 months with insurers like Aviva, Legal & General and Royal London substantially enhancing contracts to deliver better cover for consumers. The market has become more competitive than it has ever been, with consumers being the real winner. Our doctors analysis of Guardian’s definitions show them competing very well at the top end of the market.
This graph is based on our doctor’s analysis of critical illness conditions where the scores for each individual condition have been weighted in line with UK incidence rates. Therefore, those conditions that a consumer is more likely to suffer from have a far greater impact on the overall score than conditions that are more rare.
Along with comprehensive definitions, Guardian also provide high pay outs for their additional conditions at 25% of the sum assured to £50,000. This means that in terms of our analysis of who is likely to pay more in the event of a claim, Guardian come straight in at the top of the market.
This graph depicts our analysis of the amount each insurer will pay in the event of a single claim. Progressive claims where a client may go on to claim for a second condition or may receive an additional payment due to the severity of their condition increasing or their age is not accounted for. Like the doctors analysis we have weighted each condition in line with UK incidence rates and those conditions that a consumer is more likely to suffer from have a far greater impact on the overall score than conditions that are more rare.
Critical Illness is not the only area where Guardian have looked to provide more comprehensive cover. Their terminal illness definition available on life or critical illness plans has been extended beyond what is generally offered in the market.
Across the market there are a number of insurers that will pay a terminal illness claim if the client is diagnosed with an incurable disease and given a prognosis of less than twelve months to live. AEGON, LV= and Zurich restrict their terminal illness further by stating that they will not pay a claim if the terminal illness is diagnosed in the last twelve months of the plan.
Guardian have matched the market by offering terminal illness with no restriction on the last 12 months. They have also improved their cover by stating that life only plans can also claim on the terminal illness benefit if they are diagnosed with one of four critical illness conditions that generally have longer than a 12 month life expectancy on diagnosis but a severe impact on the clients life. These are;
Waiver of premium is often an underused feature on protection plans due to the additional costs it incurs. Within the Guardian plans, premium waiver will be automatically included on an own occupation basis with a 28 day deferred period. It covers all occupations with no age or expiry limits except the client’s retirement, meaning that waiver will paid until the client actually retires and not at a pre defined retirement age. As well as this Guardian will waive premiums for six months for maternity/paternity leave and redundancy providing cover not just for illness.
Joint life cover will be provided on a dual cover basis where two linked plans will be put in force with a discount. Life and critical illness plans will be set up on the same basis instead of an accelerated critical illness approach. This means that clients can claim on critical illness and not lose their life cover and joint life clients will still have cover in place if the other makes a claim. This can provide clients with far more cover, however advisers should make sure that the reasons for this is documented as there have been a number of cases where the financial ombudsman service have considered this over insuring the client.
Whilst it is clear that Guardian have produced a compelling quality offering they still have a few hurdles to jump. A lack of claims experience and statistics could be concerning for some customers and new systems always take time to get right. It is also clear that the Guardian proposition will not come out the cheapest on any quotation portal results.
If protection is about more than price, as the market generally agrees, then the comprehensive nature and unique features of the Guardian plans should make them a serious consideration for all advisers when they go live to the whole of market.
A new provider entering the market delivering clear wording and excellent consumer focused features is likely to stimulate further positive competition between protection providers which should be good for consumers and advisers.