HSBC have a long history of providing protection to consumers via their branches, but have been relatively quiet in the advised market with the exception of a life only product. Today they announce that they are entering the advised critical illness space. Why do our medical experts find some of the wordings highly attractive?
The new proposition from HSBC offers a two-tiered approach similar to those currently offered by Aviva, Legal & General and Zurich. The HSBC Life Critical Illness product is the standard low cost offering covering 40 full payment conditions and 2 additional payment conditions. The HSBC Life Critical Illness Plus plan increases coverage to 51 full payment conditions with 40 additional payment conditions.
At launch the HSBC Life plans will only be available via UnderwriteMe. Other portals are likely to follow in due course, however this will limit the number of advisers that can access the policies in the short term. Critical Illness will be accessible as either standalone, enabling advisers to put life AND CI in place and therefore provide more flexible cover for clients (see our previous insight on this here), or via an accelerated life or CI plan.
Across the more common conditions, HSBC have taken an approach of clarity by providing wordings that are comprehensive whilst removing the requirement for investigations or evidence where possible. This is evident in their definitions for heart attack, Multiple Sclerosis, Stroke, Parkinson’s disease and cardiomyopathy as explained by our panel of medical experts:
“The wording for heart attack, a condition with significantly high incidence rates, is particularly favourable as it is clear and unambiguous. HSBC have not placed any specific stipulations on the results of certain investigations that usually qualify for payment, which is the case in the majority of other insurers.
“There is a similar approach with their simple wording for Multiple Sclerosis, another of the commoner conditions. Again, this does not have the requirement for objective evidence on certain investigations that are often specified by other insurers. HSBC also provide very reasonable wordings for both stroke, Parkinson’s disease and cardiomyopathy.”
In terms of their overall critical illness coverage, the strong definitions for conditions such as heart attack and stroke put them in a good position in the market when compared to current plans.
The graphs below highlight who is most likely to pay a claim based on our independent medical panel’s assessment of insurers’ definitions combined with age-banded incidence data. The age-banded incidence data along with the gender, age and term of the plan enables us to weight each condition based on how likely someone is to suffer from it. 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 rarer.
The following example is based on a 50-year old female taking out a 10-year policy:
The following example is based on a 25-year old male taking out a 10-year policy:
In terms of the amount HSBC Life will pay in the event of a valid claim for an additional condition, this has been set at the lower of 25% of the sum assured up to a maximum of £25,000 across both the standard and plus products. This is similar to the majority of the market, however in recent times we have seen insurers such as AIG, Aviva (on upgraded CI), Guardian and Legal & General increase either the maximum percentage, maximum monetary amount or both.
Children’s cover is offered as standard on all plans and will pay 50% of the sum assured to a maximum of £25,000 for full payment conditions, or 25% to a maximum of £25,000 for additional conditions. Children are covered the same conditions as the life assured with the exception of Total & Permanent disability and type 1 Diabetes (within the Plus proposition).
It is great to see child funeral cover included within both products, where HSBC Life will pay “Children’s bereavement assistance” of £5,000 if the standard plan is taken and £10,000 for the Plus proposition. Also within the Plus plan, HSBC Life provide a child hospitalisation benefit where they will pay £100 for every consecutive night a child of the life assured spends in hospital after an initial seven consecutive night period. Currently only Aviva and Legal & General offer this benefit. Whilst Aviva’s wording is broadly the same as HSBC Life’s, Legal & General take a slightly different approach as they require the hospitalisation to be within the 3 months following a claim and do not require an initial period of hospitalisation or for the hospital stay to take place on subsequent nights.
As with other critical illness plans, total and permanent disability can be added at an extra cost and is available on an own occupation (up to age 65) or activities of daily living definition. The plan can run to age 80 and if TPD is selected it can also run up to age 80. As many insurers in the market only allow TPD up to the age 70 (as the chart shows) this will provide extended coverage for those at older ages.
It is always positive to see increased competition in the market and particularly from insurers that have the ability to produce both comprehensive and cost effective plans. Their policy documentation is well laid out and clear which is something we love to see at Protection Guru. At present there are no added value benefits being offered as part of the overall proposition which HSBC should look to address as the products develop. This aside, the new products position HSBC well in both the comprehensive and cost effective end of the market and I am sure there is lots more to come as they broaden their reach into the wider market.