Critical Illness Insurance The Non Disclosure Problem

Critical Illness Insurance The Non Disclosure Problem



Critical Illness Insurance the​ NonDisclosure Problem
If youre in​ the​ unfortunate position of​ having to​ make a​ claim on​ your critical illness insurance policy,​ the​ last thing you​ want is​ insensitive hassle or​ apparent non cooperation from your insurer. But according to​ numerous newspaper articles,​ thats precisely whats happening. the​ core problem is​ that before theyll pay out,​ the​ insurer will always want to​ make exhaustive enquiries about your past health record. Whilst youll have provided them with lots of​ similar information when you​ initially applied for the​ cover,​ the​ insurers will now insist that all the​ information is​ rechecked. And if​ at​ the​ time you​ said you​ werent a​ smoker,​ theyll now want this verified by your doctor.
The reasons are obvious. Theyre faced with a​ big claim,​ typically way over £100,​00,​ and they want to​ be certain that you​ told them the​ entire truth about your health when you​ first applied. This means that now youve claimed,​ theyll crawl over your medical records in​ great detail checking that you​ disclosed everything on​ your application. Every small and apparently insignificant detail will be subject to​ intense scrutiny. the​ problem is​ that their reams of​ correspondence can be quite upsetting for you.
The insurers defend their procedures saying that they need to​ be certain that when they accepted the​ business,​ you​ disclosed the​ full truth about the​ factors affecting your health. They want to​ be sure that you​ didnt cheat by omitting some information in​ order to​ dupe the​ company into issuing a​ policy when they otherwise might not,​ or​ to​ help you​ qualify for a​ lower premium. Either way,​ nondisclosure as​ they call it,​ is​ cheating and a​ valid reason for them refusing your claim. it​ doesnt even matter if​ the​ information you​ omitted ultimately had nothing to​ do with the​ illness that occasioned the​ claim. the​ insurers position is​ that every piece of​ information you​ provide was used to​ work out your premium and any omission affects the​ calculation.
The insurers are particularly distrustful if​ the​ claim arrives within the​ policys first five years. Any claim arising during this period is​ classed as​ an early claim and the​ insurers are particularly watchful for policyholders who took out the​ critical illness insurance already suspecting that that they were already ill.
The problem is​ that all this intense scrutiny attracts a​ very bad press. if​ youre very sick and distressed,​ the​ last thing you​ want is​ lots of​ questions and highhanded hassle from your insurer.
Theres undoubtedly a​ conflict here. if​ they are to​ neutralise the​ bad press,​ the​ insurance companies need to​ work much harder at​ softening the​ enquiry process and they must liase much more closely with their claimants. Insurers must present a​ much softer centre at​ what is​ a​ most distressing time for their claimants.
All this adverse PR has had two effects on​ the​ critical illness insurance market. Applicants have apparently been favouring insurers who publish the​ lowest rejection rates and others have withdrawn from making any application.
In practice,​ avoiding insurers who publish high refusal rates has little benefit. Thats because the​ published figures can be misleading. the​ latest figures show that Scottish Equitable Protect has refused to​ pay out on​ 28% of​ critical illness claims followed closely by Friends Provident at​ 25%. if​ you​ compare these figures with Scottish Provident at​ 13. 7%,​ many potential policyholders can be forgiven for favouring Scottish Provident. But thats not necessarily the​ best decision.
The problem with interpreting these figures is​ that the​ figures themselves can be distorted by how long the​ insurer has been active in​ the​ critical illness market. as​ rejection rates are highest with policies that have only run for a​ few years,​ then companies that are new to​ the​ critical illness market will automatically have the​ highest rejection rates. This leaves companies such as​ Guardian Financial Services looking good with a​ rejection rate of​ just 10%. the​ truth is​ that the​ Guardian has been in​ the​ market for over 15 years and has a​ mature book of​ business.
And its a​ pity that all this negative publicity has undermined confidence in​ critical illness insurance. in​ our view,​ this insurance plays an important part in​ protecting family finances but people are being deterred from buying it,​ leaving their family unit exposed if​ they become seriously ill. After all,​ if​ the​ main income provider is​ taken seriously ill,​ the​ familys income can plummet. That means that the​ taxfree lump sum paid out by these policies can become central to​ the​ familys financial survival.
Our advice is​ if​ you​ think you​ need critical illness cover press on. But be aware that these policies vary a​ lot in​ the​ cover they offer so straight price comparisons arent really meaningful. Basic plans will cover one or​ more of​ the​ most serious conditions but comprehensive plans cover many more for example
Alzheimers disease
Aorta graft surgery
Aplastic anaemia
Bacterial Meningitis
Benign brain tumour
Blindness
Cancer
Cardiomyopathy
Chronic lung disease
Coma
Coronary artery bypass surgery
CreutzfeldtJakob disease
Deafness
Dementia
Heart attack
Heart valve replacement or​ repair
HIV or​ AIDs from an assault,​ blood transfusion,​ occupational duties or​ accident
Keyhole heart surgery
Kidney failure
Loss of​ independent existence
Loss of​ limbs
Loss of​ speech
Major organ transplant
Motor Neurone disease
Multiple Sclerosis
Paralysis/Paraplegia
Parkinsons disease
Progressive Supranulcear Palsy
Stroke
Third degree burns
Total and Permanent Disability
Cover for children
This complexity means that you​ really need independent advice. There are plenty of​ web sites that can help you. Just search for critical illness insurance and make sure you​ can talk to​ an adviser before you​ buy.




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