Five facts about Serious Illness Cover you might not know

Vitality’s Serious Illness Cover is more than just a different name for critical illness cover. By adopting an alternative approach to how the product works, more aligned to the trends shaping our world and the evolving needs of today’s consumer, Serious Illness Cover can help to deliver better outcomes and more relevant cover for your clients.

Earlier in the year, Vitality unveiled a number of enhancements to Serious Illness Cover as part of our 2023 Life Launch, whilst the recent publication of our 2023 Life Claims and Benefits Report explored the claim statistics and stories behind the product.

At a time when financial protection is needed more than ever and advisers are looking for opportunities to grow their protection business, here are five facts about a product which provides comprehensive severity-based coverage, designed to stay in place for longer.

1. Your clients are more likely to receive a pay-out on Serious Illness Cover

Being diagnosed with an illness can have a financial impact at any stage, even if picked up early. This is why Serious Illness Cover offers a severity-based approach across a broader set of conditions, allowing more comprehensive cover and increased likelihood of claim.

One in eight claims paid last year were for unique conditions not covered by a typical enhanced critical illness plan. This number increases to one in six when comparing to a typical core CI plan¹.

Paying out appropriate amounts based on severity and the impact each condition will have on your client’s life means Serious Illness Cover offers pay-outs much earlier, rather than just the full lump sum for a more severe diagnosis later down the line.

This innovation is based on many of the wider trends we see in medical science, with improvements in screening, diagnostics and treatment meaning more conditions are being diagnosed at an earlier stage.

Protection Guru’s Adam Higgs describes this as “a more sustainable approach” and “takes away the lottery elements of critical illness and means that clients can be paid out in line with how ill they are”².

2. Pays out in full for 74 conditions

As well as providing broader coverage, for more conditions, across different severity scales, Serious Illness Cover will also still pay out in full for many conditions.

Serious Illness Cover 2X and Serious Illness Cover 3X both include 74 conditions where the client will always receive 100% of the sum-assured, including all of the current ABI (Association of British Insurers) minimum standard definitions.

Serious Illness Cover 1X meanwhile includes 62 conditions where the client could receive 100% of the sum-assured at the maximum severity level.

3. No arbitrary financial caps on additional payments

Because Serious Illness Cover pays out based on severity, there’s no arbitrary financial caps applied to payments. Instead, the client is paid a percentage of their overall sum-assured, based on how severe their illness is and the potential financial impact.

Other traditional critical illness plans have responded to the growing need for broader cover for less severe illnesses through the introduction of additional payment conditions. For these conditions, the client is paid a lower amount in the event of a claim.

The drawback to this approach though is that those insurers all apply arbitrary caps on the amount the client will receive. The pay-out is usually represented as the lesser of: a percentage of the overall sum-assured, or a capped amount specified by the insurer - for example, 25% of the sum-assured up to £25,000.

Because there is no financial cap applied to the maximum pay-out a client could receive through their Serious Illness Cover plan, Vitality will potentially pay-out more at higher levels of sums assured.

For example, a client with £500,000 of Serious Illness Cover claiming for a severity level D condition paying out 25% of the sum-assured, would receive £125,000. Whereas an additional cover claim on a traditional critical illness plan might only pay-out £25,000 because of the insurers financial cap.

This is also important for plans sold with indexation, as even a modest rate of inflation would see the clients cover increase considerably during the term of the plan.

4. Cover doesn’t end after a claim is paid

Unlike almost every other type of insurance, traditional critical illness cover is unusual in that following a full pay-out, cover ceases entirely. This leaves the client uninsured and often uninsurable if they need to obtain further cover after an illness.

With Serious Illness Cover, however, clients can claim multiple times if their condition deteriorates, or they’re diagnosed with a new condition. And, Serious Illness Cover 2X and 3X will pay out the full sum-assured more than once.

This helps ensure cover stays in place for longer, while preventing members from becoming financially vulnerable if an illness recurs or they suffer an unrelated secondary condition. Last year, one in 12 claimants were claiming for their second or third time³.

This is important given that whilst advances in medical science mean more people are likely to survive a major illness, this can lead to an increase in recurrence or new illnesses arising. One in five cancers reoccur⁴  and one in four strokes are repeats⁵, while one in five people who have suffered a heart attack will also be admitted to hospital within a year with another one.

5. Later life Dementia and FrailCare Cover is automatically included

Vitality’s unique Dementia and FrailCare Cover is now automatically included on Serious Illness Cover, giving clients the choice to continue their cover beyond the normal term of their plan.

The issue of later life care funding is a growing problem in the UK, particularly related to dementia, with 1 in 6 over the age of 80 now living with the condition⁶ and the overall number of people with dementia in the UK expected to double to 1.6 million by 2040⁷.

To date, Vitality has insured over 70,000 with Dementia and FrailCare cover and although there’s more work for the industry to do, this unique cover gives advisers the option to provide more comprehensive, longer-term financial protection for their clients.

1. Vitality Life Claims and Benefits Report 2023
2. ‘The changes are really positive’: Adam Higgs on Life Launch 2023 (vitality.co.uk) 
3. Vitality Life Claims and Benefits Report 2023
4. American National Cancer Institute, (accessed 2023)
5. Preventing Another Stroke | American Stroke Association
6.What is d ementia? | Alzheimer's Society (alzheimers.org.uk)
7. Number of people living with dementia to more than double by 2040 (lse.ac.uk)