The Big V - a classic Branson innovation or waste of money?

Virgin is expanding to offer critical illness cover, but the experts are not convinced, writes David Prosser

Sir Richard Branson's business ventures have included everything from a record label to an airline, but his latest idea is a little less glamorous. His Virgin Money subsidiary is launching The Big V, an insurance policy that pays out to people diagnosed with cancer.

At first sight, the insurance has the hallmarks of a classic Branson innovation - it's a fresh approach to an old-fashioned product offering consumer-friendly terms and conditions. But insurance experts are already expressing reservations.

"The policy plays on people's fears about cancer," claims Simon Burgess, managing director of independent adviser British Insurance. "If you have a limited amount to spend, you would be much better off with a smaller amount of more comprehensive insurance."

The Big V is a type of critical illness insurance, cover that pays a guaranteed cash lump sum if the policyholder is diagnosed with a serious health problem covered by the policy. Conventional critical illness insurance covers about 30 conditions - from cancer to heart disease or a stroke - but is expensive. The Big V is much cheaper, but covers only cancer.

Policyholders will in effect be taking a gamble. Between 55 and 60 per cent of claims on critical illness insurance policies are for cancer. By ruling out all other conditions, Virgin Money can offer much cheaper premiums - in return, you limit the circumstances in which you can make a claim.

Still, the savings are substantial. Virgin Money would charge a 35-year-old male non-smoker about £23 a month for £100,000 of cover against cancer. Virgin says the same amount of standard critical illness cover from companies such as HSBC would cost about £50 a month.

The Big V has another innovation. With critical illness, it is not usually possible to claim until your disease has become very serious. Virgin is offering a staged pay-out - policyholders get 10 per cent of the lump sum on diagnosis, a further 15 per cent when the cancer reaches an intermediate stage, and the balance if it becomes advanced. Virgin says this offers policyholders help from the moment they become aware of illness.

So why are insurance analysts so sceptical? Kevin Carr, managing director of Lifesearch, says: "Virgin is only selling this cover direct, so independent financial advisers such as us can't sell it to customers - but even if we could, we wouldn't because we couldn't justify the advice." Carr is concerned that most people buying the Virgin policy would be better off with an income protection policy (see panel).

Jason King, managing director of independent adviser Life Policies Direct, applauds Virgin for innovation in a market that has struggled to win over people who would benefit from cover. But he adds: "There's no advice when you buy this cover, and many consumers will end up with something they don't really understand. Ultimately, in our judgement, this insurance is not good value for money."

King likes the concept of the staged pay-outs. But he says the severity of cancer required for an intermediate pay-out of 25 per cent of the lump sum from Virgin is equivalent to when critical illness insurers would make a full pay-out. "To get the full pay-out from Virgin, it seems to us that you would need to be diagnosed as pretty close to terminally ill," King says. "In which case you'd be better off with a life insurance policy - most pay out on diagnosis of a terminal condition, even before death."

Scott Mowbray, of Virgin Money, rejects these criticisms. "Our policy definitions are identical to the standard definitions laid down by the Association of British Insurers," he says. "There is no one-size-fits-all approach to protection and people need a portfolio of policies."

He also argues that The Big V will get people focused on insurance. "People aren't buying critical illness insurance because it's too expensive - by focusing on the condition that represents 60 per cent of claims we can drive down the cost of cover."

Does your family have the right cover?

There are so many different types of insurance that it is difficult for people to know what their priorities should be with protection products such as life and health insurance. However, while people's individual needs differ - depending on whether they have families, for example, or what benefits they get from employers - most independent advisers believe in a pecking order for protection.

* At the top of the list comes income protection cover, which pays you a guaranteed monthly income if you can't work due to ill health. The cover will pay out for as long as you are off work, up to your retirement age, providing income to keep up with mortgage repayments and other crucial commitments.

* Life insurance is equally important - basic term assurance policies will pay out a guaranteed cash lump sum on your death, which could be used to pay off your mortgage, say, or invested to produce an income for your dependants.

* Only when you have covered these two basic needs should you consider secondary protection, such as critical illness insurance. This pays out a fixed lump sum of cash if you are diagnosed with a serious disease covered under the policy.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor