Unum Simplicity
Simplicity is Unum’s new group risk critical insurance policy for employers with 50 or more employees. All employees must join the scheme, as long as they are actively at work. Premiums are paid by the employer, but can be topped up by the employee in some situations. The plan guarantees cover for all employees under age 70, there is no medical underwriting and pre-existing conditions are covered.
The policy covers just ten critical conditions and provides a minimum of £10K cover per employee. That can be increased, with five cover steps available, typically going up to a maximum of £60K per person. In addition, benefits may be increased or decreased at annual renewal, and there is no limit on increases, provided the employee is actively at work. Where the employer provides less than the maximum £60k cover, the employee can top that up to £60K under a flexible benefits arrangement. Premiums are guaranteed for two years.
The ten conditions covered by Simplicity are: benign brain tumour*; cancer; coronary artery bypass graft*; heart attack*; kidney failure; major organ transplant*; motor neurone disease; multiple sclerosis*; Parkinson’s disease and Parkinson’s plus syndromes*, and stroke*. Definitions are broadly industry standard, and those marked with an * have an ABI+ definition. Children are covered free from 30 days until age 18 (or to 21 if in full-time education) and the children’s benefit is 25% of the member’s benefit.
There is a 14 day survival period and, once a claim is made, cover for that employee then stops. Cover may also cease if the member opts out of the employer’s pension scheme (if eligibility under Simplicity is linked to pension membership).
Comment: Ever since CI was ‘invented’ back in the mid1980s, the trend has been to extend the number of specific conditions covered. Very early plans actually covered less than ten conditions, but it is rare now for new plans to cover less than 30, and many plans cover a lot more. That means today’s plans can pay out to more people but the law of diminishing returns applies, with most claims still being for cancer, stroke, heart attack and MS. Moreover, a major criticism of CI cover is that it has become too complex. Forty or more conditions may be covered, each one with its own lengthy definition and we recently read one set of T&Cs that ran to over 130 pages. At those levels, understandability becomes an issue.
Unum’s approach with Simplicity has been to eschew that and to go back to simpler days by just covering ten conditions, albeit the ones most people are likely to claim on anyway. That’s a double edged sword though – most people will be happy they have at least a sporting chance of knowing what they are covered for, but some will invariably not be able to claim when, if more conditions were covered, they might be able to.
To some extent, this dilemma is made easier by the fact that this is a group not an individual product. If your employer is paying for the cover it’s arguably up to them how generous they want to be, and having a simpler plan should certainly appeal to many employees when a more complex plan might not.
So, it’s not perfect but, frankly, nor is any CI plan. Instead, this plan may appeal to employers who want to provide simple and easy CI cover – as long as they are aware of its limitations.
Plus points: Group CI cover that’s simple; Pre-existing conditions are covered; Minimal underwriting.
Not so plus points: Only ten conditions covered; Premiums not guaranteed so could rise in future; Maximum benefit is relatively low; All employees must be part of the scheme.
Website: http://www.unum.co.uk.
Rating (max 10): Innovation: 7. Overall: 7.5. Silver
Tags: CI; Unum