On The Case: Three real-life claims you might not expect to be paid
VitalityLife Managing Director, Justin Taurog, talks us through three real-life claim case studies to remind us of the power of comprehensive severity-based cover.
Life is full of uncertainty. None of us have a crystal ball. And whilst actuarial science may make broad predictions of risk, we ultimately don’t know what’s going to happen to individual clients.
This lack of certainty, on one hand, justifies the need for products like Serious Illness Cover in the first place, by protecting clients from the financial impact of an unforeseen illness.
But uncertainty also poses a challenge for advisers. No adviser can predict what illness their client will get and therefore there’s always a risk they will need to tell their client they aren’t covered for something - a conversation no adviser wants to have.
The limitations of traditional critical illness cover
Despite the progress the industry has made in the 40 years since the first ‘dread disease’ critical illness plan was launched, most traditional products still work on an ‘all or nothing’ basis of paying out in full for a limited number of conditions.
If the client’s condition isn’t covered or it doesn’t quite meet the definition wording, they get nothing. If they do meet the criteria and receive a pay-out, they’re often then left uninsured and uninsurable.
And, whilst the widespread adoption of additional cover conditions at least means clients are now covered for a wider a range of less serious illnesses, this cover is irrelevant if the client claims for a full payout condition first (leaving them no longer covered). The payouts for these conditions also tend to be arbitrary and driven more by market competition than the actual impact of the condition.
This doesn’t always lead to the best outcomes for clients and their adviser.
Providing more certainty
So how do we help ensure that if a client falls ill, there’s a higher likelihood their claim will be paid?
The answer lies in providing the most comprehensive cover, for the broadest range of conditions, that doesn’t simply end as soon as the client has successfully claimed.
Through this, we can increase the likelihood that a person will be covered, regardless of how many times they fall ill, based on severity of health impact rather than an ‘all or nothing’ payment for a listed condition.
Not only does this increase the likelihood of a better claim outcome for clients, but it also gives advisers more certainty. Ultimately because if their client does fall ill, they are more likely to receive a payout.
Exploring the evidence and real-life cases
The claims statistics speak for themselves, with 1 in 8 claims 2022 for conditions not covered by a typical enhanced plan, reducing to 1 in 6 when comparing against typical core plans. We also see how 1 in 12 claims were for individuals that had claimed previously.
But it’s not until we delve into some of the real-life claim stories that the strength of this approach really comes to life.
We heard recently from Hayley, who suffered a pulmonary embolism, a condition only covered by Vitality, and went on to be diagnosed with cancer just two years later all before she reached the age of 40.
Delving through some of our claim data, some recent claim stories really stood out for me, of clients claiming for unique conditions not covered elsewhere and all of whom continue to be covered after their claims were paid.
Case 1: Joe
16-year-old Joe* was covered under the separate Children’s Serious Illness Cover benefit of his parent’s plan. In 2021, after experiencing persistent stomach pain he was diagnosed with Crohn’s Disease.
Around 300,000 people in the UK have either Crohn’s Disease or ulcerative colitis, so it’s far from an uncommon condition. Following Joe’s diagnosis, he was treated with high-dose steroids and immunosuppressant injections. Unfortunately, severe complications arising from a Covid-19 infection in 2021 necessitated additional steroid treatments. Since then, he undergoes regular check-ups at a children’s hospital and immunosuppressant injections every six weeks.
The severity level C (50%) claim was accepted and £10,000 was paid out under the Children’s Serious Illness Cover benefit, for inflammatory bowel disease.
As Joe has not required surgery to treat his condition, a stipulation of all other critical illness definition wordings, no other insurer would have paid this claim.
Case 2: Victoria
36-year-old Victoria* was rushed to hospital in 2023 and placed on a ventilator, suffering acute deterioration in liver function as a result of pneumonia.
After being placed on a liver transplant register, Victoria’s condition began to improve and, fortunately, within six months she no longer required a transplant and instead was moved to the care of a general hepatology clinic.
Victoria had undoubtedly gone through a serious health episode but had been fortunate in not experiencing full organ failure, and was only placed in intensive care for two days.
She, therefore, wouldn’t have met the criteria under most policy definitions. However, her Serious Illness Cover was able to pay out a severity level E (15%) £4,000 under severity level E cirrhosis of the liver – a condition affecting around 30,000 people in the UK and 7,000 new cases diagnosed each year - where other insurers would only cover end-stage liver failure.
Case 3: Jonathan
43-year-old Jonathan* was rushed to hospital after experiencing difficulty breathing and persistent pain across his upper body.
Jonathan was diagnosed with a pulmonary embolism – a blood clot in his lung – and spent a week in in hospital.
After being discharged, he’s on a course of treatment for six months and will have a follow-up to confirm whether further ongoing treatment will be required. He’s still experiencing some symptoms, including shortness of breath and occasional chest pains
Like Hayley's story, Jonathan is one of the over 36,000 people that are admitted to hospital each year with a pulmonary embolism. As a unique condition only covered by Vitality, Jonathan received a Serious Illness Cover payout of £15,000 under severity level E (15%).
* The names of these claimants have been altered to hide their identity.
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