An Alternative to Serious Illness Cover?

10 March 2021

We’ve been talking a lot about life and serious illness cover recently but this week I want to talk about the newest addition to the market, namely Multi-Claim Protection Cover which, as the name suggests, can pay out multiple times over the term of the policy.

Royal London brought this new type of cover to the market as health data showed that serious illnesses were being diagnosed earlier and treated more effectively than ever before, so patients were not always getting to the stage where a Serious Illness Claim would pay out. They designed this product to pay out a sum of money based on the potential impact caused by a medical condition or the treatment that would have to be given. The more serious the illness/treatment the greater the percentage of the claim you may be entitled to, up to a payment of 100% of your cover.

The below examples explain how the policy would work in certain scenarios:

Example 1: Anne took out a Multi-Claim Protection Policy for €50,000 and unfortunately shortly after was diagnosed with a terminal illness. The policy paid out the full amount of €50,000 (100%).

Example 2: John took out a policy for €100,000 over 20 years. Within the year he has been informed of an unprecedented global pandemic and he and his wife must home school their three adorable children while continuing to work from home. On his third week into algebra class, John suffers a heart attack. He makes a claim and is entitled to 20% of his cover, resulting in a pay out of €20,000.

2 months later, while still home schooling, he loses his foot in a disastrous accident while trying to attempt some DIY, which allows him to claim a further 25% (€25,000).

15 years later, (having attended numerous parties and gone on countless holidays after the global pandemic) John was diagnosed with prostate cancer and required surgery to remove the tumour, resulting in a 10% payment (€10,000). His doctors also recommended Radiotherapy which resulted in a further 20% payment (€20,000).

The policy has paid out a total of 75% at this stage. Over the lifetime of the policy, although multiple claims can be made, the claims cannot surpass 100% of your cover (i.e. €100,000 in John’s case). As such, although John recovers from his cancer, he sadly passes away 3 years later and the remaining 25% (€25,000) is paid out.

The Multi-Claim Protection policy covers all the major illnesses that, unfortunately, are all too prevalent today such as cancer, MS, heart failure and stroke. However it also covers some illnesses that are not typically available through a serious illness policy, for example, hip replacements and it can be possible for some people with existing illnesses to get cover, such as those with type 2 diabetes or who have had cancer.

So why consider this policy? This cover helps to protect you in many cases where serious illness cover may not. For example, if you need a significant surgery or treatment for cancer that is not life-threatening, you may come under financial pressures from being off work. This cover can help to ease that burden and provide you with enough money for the short term financial support required for you to recover. In short, this type of policy gives you peace of mind against some of life’s less threatening setbacks, which are often the ones we are less prepared for, as well as the more serious ones.

There are some cases where the old-fashioned Serious Illness Cover or an Income Protection policy is more suitable, but it is worth looking at all options and seeing which policy will best suit your needs.

Jacinta Clerkin, BSc QFA FLIA RPA, is a Qualified Financial Advisor, Fellow of the Life Insurance Association and Retirement Planning Advisor. You can contact her through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on jacinta@jfl.ie.

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