‘Additional’ is where these payments do not reduce the main sum of insurance, whereas partial payments do reduce the sum assured.
These were originally called ‘partial’ payments, however the Association of British Insurers CI working party changed this term more than a decade ago avoid confusion with Vitality’s serious illness cover plan.
The advent of these payments enabled insurers to pay out a percentage of the sum assured depending on the severity of the condition. If the condition progressed to the next level, then another payment would be made.
Although it is still hotly debated as to which provider first came up with the concept, Alan Lakey, founder of CI Expert, says he believes the idea was first brought to fruition by Skandia in 2003.
“The introduction of additional payment conditions first introduced by Skandia in March 2003 for early-stage prostate cancer and mastectomy kick-started the additional payment trend, with others following and expanding the coverage to include more than 40 conditions,” he says.
This was followed in 2010 when Bupa added carcinoma in situ of the cervix and in January 2013 when AIG, then trading as Ageas, introduced in situ cancer of the testicle.
“Most consumers do not understand cancer staging,” says Lakey, “so these important additions strengthened the cancer coverage, bringing much needed comfort and reducing the scope for complaints”.
Wesley McCranor, head of protection at PIB Employee Benefits, adds: “The inclusion of CI on relevant life plans is the front-runner for me. Not only did it encourage business owners to take out CI cover, thanks to the tax relief, but it also forced the use of a trust, which is still not implemented as routine across the market.
"A close second for me has to be severity payments because it changed the game.”
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Other advisers agree. David Mead, director at Future Proof Insurance, says partial payments have also helped to instil a degree of trust in the sector.
“The advent of partial payments for less serious conditions has probably been one of the most welcome developments in the sector,” he says.
“This means that clients may well still be covered, when in the past their diagnosis could well have resulted in a declined claim. This helps to engender trust with consumers and ensures that more people are supported at their time of need.”
The introduction of partial payments has certainly helped to eradicate a grey area around industry definitions and the claims process, helping to quell the perception that insurers always found a way to avoid paying claims.
“Introducing partial payments has also been crucial in removing negative CI stories from the press,” says Phil Jeynes, director of corporate strategy at Reassured.
