Partial Payments - Are They Worth It?

The last few years have seen an increase in insurers including “Partial Payments” within their Critical Illness Cover policies.

Your standard Critical Illness contract would these days typically cover you for between 35 – 45 conditions which when diagnosed would payout the sum assured. Partial payments are paid if you are diagnosed with a less severe critical illness and are not usually deducted from your original sum assured.

The payment will be calculated upon the severity of the condition and can range between 10% to 25% of the policy sum assured; these payments can be capped to a maximum monetary value, please see your policy wording.

The main reason and main benefit of these partial payments is that you may still qualify for a payment from your policy even if you have not had one of the main conditions listed. An example of one of the partial payments is as follows;

We will pay the lower of 25% of the amount of cover and £25,000 if you are diagnosed with ductal or lobular carcinoma in-situ of the breast, that is histologically confirmed, and results in you undergoing surgical removal on the advice of your hospital consultant.*

This partial payment can benefit those individuals whom developed breast cancer, if it was isolated and treated early enough to not be defined as a full 100% cancer claim.

What started off a few years ago with a handful of companies including mastectomy benefit has now progressed to numerous partial payments on offer. Partial payments cover now seems to be a numbers game between the insurers to see who can offer the most. The list of what is available now is almost as long as the standard policies:

• Accident Hospitalisation cover
• Bladder Removal
• Carcinoma In Situ of the Cervix
• Carcinoma In Situ of the Lung
• Carcinoma In Situ of the Urinary Bladder
• Cerebral Aneurysm
• Cerebral Arteriovenous Malformation
• Coronary artery angioplasty
• Crohns
• Mastectomy
• Minor heart attack
• Minor Stroke
• Non-Malignant Pituitary Adenoma
• Non-severe cardiomyopathy
• Partial loss of sight
• Partial third degree burns
• Proctectomy
• Removal of an Eyeball
• Severe ulcerative colitis
• Significant Visual Impairment
• Testicular carcinoma in situ

This does not even take into account Pruprotects** entire Serious Illness Cover policy that is primarily structured around severity based partial payments. Each company only offers a select few of these conditions, no one as yet offers them all within one policy but with such a competitive market I am sure it will not be far away.

I suppose the main question is ‘Do they work or are they just a gimmick?’

At the moment claims history is low as the insurers have not been running them long enough to gather any significant information. Certainly when mastectomy and prostectomy cover were introduced they were well received and addressed a gap in the policies. It is still up in air as to whether some of the new partial payments fill a similar sized gap. Some of the more common critical illnesses covered certainly do, but for the more obscure critical illness a few more years of claims history will need to be analysed. Time will tell if they benefit clients or are to simply help the insurers play the numbers game.

* https://www.lv.com/adviser/protection-products/fpp-mk2/ci/the-critical-illnesses-covered/ accessed 15th April 2014
** Update: This product is now Vitality Life and not PruProtect.