15 December 2020


Guardian research sparks debate around terminal illness definition. 

Guardian research into over 500 advisers has found that 68% strongly agree and 24% agree that if a client is diagnosed with incurable stage 4 cancer, the terminal illness definition within a life insurance policy should pay out on diagnosis and not on life expectancy. 

The study also found that 65% of advisers would feel uncomfortable or very uncomfortable telling a terminally ill client that they could not claim until their doctor had confirmed their life expectancy was less than 12 months. Less than a third (32%) said they would feel comfortable or wouldn’t mind. 

Most advisers (67%) didn’t realise that so many life insurance claims were for terminal illness. When told that terminal illness claims account for 20-25% of the industry’s life insurance claims, 67% said this was higher or much higher than they thought. Only a quarter said this was in line with their expectations and 6% said this was lower than they thought. 

Standard industry practice currently is for life insurance policies with a terminal illness definition to pay out when they have evidence that the claimant has less than 12 months to live. Of the 553 advisers surveyed, 91 said they’d had clients who’d made a terminal illness claim. Of these 13% said the claim had been declined because they did not yet have evidence that the client had less than 12 months to live. 

Katya MacLean, Guardian CEO, said: “The terminal illness definition is a valuable feature of life insurance, but given its nature, is not without challenges for the industry. It’s difficult for the medical profession to predict life expectancy with certainty. This causes an obvious problem if we’re using life expectancy as the criteria for a terminal illness payout. What it means in practice is some terminal illness claims are declined, at least initially, as the insurer has to say the claimant is ‘not yet ill enough to claim’ despite their terminal diagnosis. 

“This discrepancy between the claimant’s expectations and the reality of claim is not good for the industry. This research shows advisers feel the same. At Guardian we designed our definition differently. We know that most terminal illness claims are for incurable stage 4 cancer. So, we’ve widened our terminal illness definition to pay out on diagnosis and not on life expectancy. 

“Some could say this widening of the terminal illness definition crosses too far into critical illness. However, we’d argue it doesn’t. Terminal illness is designed to accelerate the death payout in certain cases so we can better meet customer needs. For us, the standard definition was not working in the way we think customers expect it to. So we’ve structured it in a different way that’s more in tune with client needs and better aligned with medical practices.” 

Guardian’s survey found that 79% of advisers said their clients would be willing to pay more for a proposition with a terminal illness definition that paid out on diagnosis rather than life expectancy, with 80% saying they thought their clients would pay up to 10% more. 

-Release ends- 

Notes to editors:

Press enquiries to Natalie Robinson, 07789 501146, 

Results from Guardian adviser survey of 553 advisers from 19 October until 30 November 2020. 

External statistic: 20-25% of the industry’s life insurance claims are for TI – Source: Aegon (23%) and Royal London (21.5%) published claims statistics for 2019. These were the only TI claims stats published in 2019. 

Guardian Financial Services is an appointed representative of Scottish Friendly
All products are provided by Scottish Friendly Assurance Society Limited (SFA) and we have an agreement with them to underwrite and issue the protection policies we distribute through the UK intermediary channel. As an appointed representative of Scottish Friendly Assurance Society Limited, Guardian Financial Services Limited is the market-facing brand under which we promote our proposition and engage with advisers. 

Background to Guardian Financial Services, owned by Gryphon Group Holdings
Guardian, the new life and protection insurance business, launched in 2018 and pledged to grow the protection market. The brand promise of ‘Life. Made Better.’ reflects the company’s commitment to rethink and reinvent protection for the better; making sure customers get cover that’s easier to understand, simple to buy and designed to never let them down. 

Guardian’s business partners
Gryphon Group Holdings is majority owned by Punter Southall Group as the largest equity capital investor. Its back-end technology partner is Liss Systems, the UK arm of Nasdaq-listed EXL. Its front-end technology, branding and marketing partner is Space, UK based financial services specialists. Risk partners are Hannover Re and Gen Re.