Three-quarters of advisers think that customers interested in life cover would pay more for an enhanced terminal illness definition, research from Guardian has revealed.
The research, sponsored by Guardian and conducted by iPipeline, follows the Financial Conduct Authority (FCA) review last year into terminal illness benefits offered within life insurance policies.
One conclusion of the review was that there was scope for the industry to consider offering an enhanced definition.
The review also acknowledged that an enhanced definition was likely to come at a greater cost.
According to Guardian’s research, most advisers (74%) thought customers would pay more for an enhanced definition.
Of those, 45% thought customers would pay between 5% to 10% more, 35% thought up to 5% more, and 16% thought customers would pay between 10% to 25% more.
A small minority (4%) said customers would pay over 25% more.
When advisers were asked if they felt confident explaining the difference between an enhanced and industry-standard definition, 90% said they did.
By contrast, more than half (52%) said they thought that customers did not yet understand the difference.
Guardian has offered an enhanced terminal illness definition on its Life Protection cover since the firm first launched in 2018.
This enhanced definition sits alongside the industry-standard definition available on Guardian’s Life Essentials cover.
Jacqui Gillies (pictured), marketing and proposition director, Guardian, said: “This research, which we sponsored iPipeline to conduct, has some important market insights.
“We’re pleased to see most advisers think customers value the enhanced terminal illness definition and would be willing to pay more for it.
“That’s good to know as it’s a more expensive definition to offer.”
She continued: “We’re also pleased the majority (90%) of advisers said they felt confident explaining the difference between the two definitions on offer.
“There will always be the more price-conscious customer, who can’t or chooses not to pay more for an enhanced definition.
“But the most important thing is that advisers can confidently position the difference so their clients can make an informed choice.”
Ian Teague, senior VP and managing director, UK & Europe at iPipeline, added: “We were pleased to conduct this research for Guardian, tapping into advisers’ insights.
“It’s great to see that advisers and clients value the choice of terminal illness definitions, with 90% of advisers confident in explaining the differences.
“We’re always happy to collaborate with product providers to better understand and meet the needs of advisers and their clients.”
