L&G offers premium discounts for cancer

Legal & General (L&G) has become the latest insurer to offer discounted premiums on critical illness cover (CIC) for new customers with a history of cancer.

Critical illness insurance pays a tax-free lump sum on the diagnosis of a range of serious illnesses, including cancer in its advanced stages, heart attacks and strokes.

The payments can help meet the costs of monthly mortgage repayments or medical expenses for policyholders who are unable to work due to their diagnosis. Most insurers offer cover for between 20 and 30 conditions, including multiple sclerosis (MS), Alzheimer’s disease and blindness.

Often, however, cancer claims are not paid out. Insurers can refuse the claim if it is a pre-existing condition or there is a family history of the disease – yet most claims on CIC policies are for cancer, and insurers charge full price for the cover.

This has meant that people are left paying full monthly premiums for elements of cover that they cannot make a claim on.

Insurers have been gradually changing their approach on cancer discounts to make it fairer for consumers buying these policies, with industry heavyweight L&G now adjusting its premium for cancer exclusions.

“We felt that there was scope to cut premiums for people who are excluded from cover for cancer,” said Russ Whitworth, underwriting and claims director for protection at L&G.

“It’s a fairer system, which we anticipate will save people quite a bit of money, as well as providing peace of mind that they are covered for 34 other conditions, such as heart attack and stroke.”

L&G is offering premium reductions of up to 18 per cent on its standard rates for policyholders who have a personal or family history of cancer.

“The discounts will tend to be greatest for those who are non-smokers and for females,” added Whitworth. “Each application is considered individually.”

L&G’s move means that policyholders with a history of serious illnesses will have more choice on cover and premiums.

Currently, about 300,000 new cases of cancer are diagnosed in the UK each year. Earlier this year, just two insurers, Bupa and Fortis, were offering reductions for cancer exclusions. Since then, Zurich, LV= and Axa have introduced premium reductions.

Matt Morris, senior policy adviser at LifeSearch, an independent financial adviser, said: “This is a very welcome move by Legal & General. Offering premium reductions when a condition as common and serious as cancer is excluded is a step towards treating customers fairly.”

Morris added that premium discounts for cancer exclusions were something that all insurers should offer.

“But, sadly, not everyone does,” he said. “So it is very commendable of Legal & General to step out from the crowd.”

Earlier this month, Aviva, the UK’s largest insurer, said it was considering introducing premium reductions for cancer exclusions as “it is clearly the right thing to do for customers”.

Aviva offers critical illness cover only alongside term assurance and mortgage life insurance plans.

Last month, the insurer increased the maximum sum insured from £500,000 to £2m, extended the terms for which policies were available and widened the definitions covered for all new policies.