Obtaining Critical Illness cover for anyone with Type 2 Diabetes can be very difficult, but it is possible in some circumstances, as one of our recent cases demonstrates.
The first problem is that most insurance companies will automatically decline any application for Critical Illness cover from a person with Type 2 diabetes, irrespective of positive factors, such as good control and lack of complications. So it’s difficult for consumers to know where to go.
Normally buying life insurance and critical illness cover can be done in many places like the bank, large comparison websites and financial advisers, however if your personal circumstances mean that you do not fit the standard mould, you would be well advised to use the services of a life insurance broker who has particular specialisation in dealing with people who have health conditions.
Moneysworth has been successful in arranging Life and Critical Illness cover on a number of occasions for people with Type 2 Diabetes, as a recent case demonstrates.
A gentleman in his early 40’s made an enquiry on our website: www.moneysworth.co.uk. Type 2 Diabetes had relatively recently been diagnosed, his control was good and he didn’t have any diabetic complications, but he was overweight. With a raised BMI (Body Mass Index) of 31, this made finding cover even more difficult. He wanted Life and Critical Illness cover and had a specific budget in mind for his premiums of £75 per month.
As we do in all cases, we researched the whole market for the client to see if life and critical illness cover would be available. Our research indicated that only one insurance company would offer him cover, so we applied to them. The insurer wrote to his GP surgery for further medical information and on receipt of that offered a guaranteed premium policy for £75 per month, covering the client for Level Life or Critical Illness cover (without exclusions) of £75,350 over 23 years.
People with an existing health condition who have been declined elsewhere should not give up hope of getting the cover they want until they have used the services of a specialist life insurance broker. If a client wants to find out what might be available and apply, Moneysworth do not charge a fee. This means Moneysworth is only paid a commission by an insurer if we are successful. Remember if you’re unsure if a broker is a specialist, you could ask the question: ‘What percentage of your clients have pre-existing health conditions?’. At Moneysworth that figure is over 75%!
On 2nd December Jill Insley wrote an article ( http://t.co/1Cx2wAzR ) in The Observer about Nic Hughes whose critical illness claim has been turned down by Friends Life. A campaign has started to get Friends Life to overturn their decision and backed by @stephenfry on twitter the campaign is set to gain momentum.
We have decided to support the campaign and we want to explain our reasons why.
As we have previously expressed, we have had concerns for some time that the way that life insurance companies currently work may be leaving some customers exposed to the danger of a claim being turned down. When it comes to critical illness and life insurance there can be nothing worse than thinking you have done the right thing and protected your family with personal insurance cover only to find out when its too late that the insurance company has thrown out the claim due to ‘non disclosure’.
We accept that there are some occasions where due to deliberate non disclosure an insurance company will be quite within their rights to decline a claim.
However we believe there currently exists a grey area where it is much less clear that a customer has deliberately non disclosed. Misunderstandings concerning disclosure can and do arise and in the case of Nic Hughes it looks as though this might have been part of the problem.
We believe that the current underwriting practices used by most life insurance companies are adding to this problem. This is because most life companies often deliberately make the decision not to write for further medical information from the client’s GP at the application stage, even though the client might have disclosed one or more medical conditions on the application form. For medical disclosures such as heart disease and cancer, life insurance companies will nearly always prefer to write out to the client’s GP for further medical information. But there are many potentially ‘less serious’ conditions where the insurance company may decide not to bother with this stage of the process and to offer acceptance terms straight away. In fact life insurance companies adopt this approach for the majority of applications.
The problem is that where there is no independent medical verification there can be an increased risk of misunderstanding and therefore of a claim being declined, which is potentially catastrophic for the policy holder.
Life insurance companies argue that if they were to write out for medical evidence in a greater number of cases that this would add to their costs and that it would delay customers obtaining cover. They say that customers want cover quickly and that if they can’t get it quickly they will be put off taking out insurance.
We disagree strongly and so do most of our clients. We think that the argument that the ‘client needs a fast turnaround’ is a smoke screen and that there may be other motivating factors.
Here @MoneysworthUK our clients tell us that the most important thing for them is to know that their cover is valid. Getting the job done right is much more important than getting a quick fix. In the main they positively welcome a GP report as part of the underwriting process, because it makes them feel safer that they haven’t accidentally left something out. That’s probably not surprising when you consider that the majority of our clients already have an existing health condition such as diabetes, heart disease, mental health etc.
In the case of Nic Hughes, had the life insurance company written out to the client’s GP for a report before making their underwriting decision then the current situation could have been avoided. If they had declined or postponed cover then Nic could have explored other avenues to see if other options were available. Instead of which the insurance company seems to have taken the easy route which has turned out to be easy for them but very difficult for Nic and for his family.
In Nic’s case we think Friends Life should settle the claim. If you would like to sign the petition here is the link https://t.co/7KlFyuOL
Furthermore we think that Nic’s case illustrates the need for a reassessment of underwriting procedures across all life insurance companies. One possible way of dealing with this issue would be to make insurance companies fully liable for claims arising after a limited initial period – that would change the way life insurance companies approached their underwriting processes as they would not be able to rely on non disclosure at the claim stage. But it would leave customers knowing where they stand.
In the meantime until life insurance companies change their ways we think that ‘grey’ cases should be settled in favour of the applicants.
I said recently that more needs to be done to address the number of critical illness claims that are being rejected.
I was commenting following the publication of Scottish Provident’s latest claims stats. But in the interests of balance I should say that I didn’t mean to imply that Scottish Provident (at 7%) stood out from the crowd.
Scottish Widows do – at 13%!
Thats the figure for 2011 according a recent article by John Fitzsimons called Make A Successful Claim On Your Critical Illness Insurance‘. Apparently that figure represents as 30% increase on the percentage of claims rejected by Scottish Widows the previous year!
This figure should cause everyone concern and definately requires further investigation. Don’t forget that what we are talking about here is a bankassurance critical illness plan. This means that for millions of customers of the banking group a Scottish Widows critical illness plan will effectively have been the only choice offered to them.
If you have a Scottish Widows critical illness plan maybe its time to start asking some questions.
For a long time the provision of critical illness cover in the UK for diabetics has been extremely limited. Where critical illness cover has been available it has come with significant exclusions for cardio vascular risks, the very critical illnesses that would be of most interest to those with diabetes.
The good news is that significant changes are taking place which mean that for some diabetics we are now able to arrange critical illness cover without any exclusions. As specialists in the proctection market for people with health conditions welcome this excellent new development which we believe will be of real benefit to many diabetics. Diabetics wishing to make enquiries should visit http://www.moneysworth.co.uk/ or call 0845 430 5200
We wanted to share some good news.
We were recently approached by a lady who was looking for life insurance. Aged in her late 50’s our client had suffered from breast cancer a number of years ago from which she had been in complete remission for a number of years. She also had one or two other conditions which while less significant would often with most insurance companies result in having to pay additional premiums.
The good news is that we were able to obtain life cover for this client at ordinary rates with no increase in premium to cover her previous serious health condition. The life cover includes full cover for death by whatever cause, including cancer(and including breast cancer) and the premiums are guaranteed not to increase in the future.
This is a great result!
The outcomes for life insurance applications from people who have suffered breast cancer in the past,l depend upon a number of factors.
Firstly the person must be in remission.
Secondly it is more common for there to be additional premiums charged to cover the extra perceived risk.
The amount of extra premium will typically depend on a number of different factors including the amount of time since the end of treatment (surgery, radiotherapy or chemotherapy) and the original sizing and staging. Not every life insurance company will rate the same way and this is where it pays to use the services of a specialist broker such as Moneysworth. In the above case we were able to obtain £45,000 for less than £30pm.
It is also worth mentioning critical illness cover.
It is often assumed that critical illness cover is not available for anyone who has been previously diagnosed with breast cancer. However while this remains true for some cases it is no longer necessarily correct in all cases. For cases where the initial staging was low and where some time has passed since treatment finished, not only might it be possible to obtain critical illness cover, it may also be possible to do so at very competitive premium levels too. Any future episodes of breast cancer will be excluded from the list of critical illnesses covered, as will any other critical illness which is caused by the initial breast cancer, but apart from that the full range of other critical illnesses normally available will be included in the policy.
So, if you have had breast cancer in the past, your prospects for both life cover and critical illness cover could be brighter than you think.
It has all the hallmarks of a classic taboo subject – business owners know that there is a risk to their business lurking in the background somewhere and evertime they think about it they feel vaguely uncomfortable. But the easiest thing for a business owner to do is to move swiftly on to something else. After all its not exactly a problem today and it might not even happen………
So what’s taboo? Death of course, or rather death and serious illness. To be more specific its the effect that these two events can have on a business, especially small and medium sized businesses.
If you want some proof how about this for a stat – ”39% of business owners expected their businesses to fold within the death or critical illness of a business owner”.
Here’s another one – ”58% of businesses had no formal agreement to establish what would happen in the event of the death or critical illness of a business owner”.
[source – Intsitute of Directors and Legal and General – Business Protection Research]
‘Does it really matter?’ you might ask.
The question can be answered both quantitively and qualitively.
First the numbers – according to mortality data at http://www.actuaries.org.uk/ the following is true. Take a business with three male shareholders all aged 40 – the chances of one of them dying before the age of 65 is 19%. Thats quite scary – its going to happen a lot! The chances of one of the same three suffering a critical illness before the age of 65 is 64% – and thats very scary, a probability rather than a possibility.
But the qualitive answer is perhaps even more worrying. Because most people tend to ovoid spending time thinking about this issue, they do not consider the potential consequences. These could include but are not limited to the following
1) The bank might seek to call in personal guarantees regardless of the wishes of the business owners (and yes that could mean your home is at risk).
2) The business trying to raise a significant loan to buy out the shares of the deceased party
3) The business owners may have to try to raise the money required from personal assets such as the family home
4 The business taking on considerable new loan costs to repay the loan
5) At the same time the business suffering a fall in income and profits as a result of the loss of the business owner
6) Therefore the bank may not even agree to fund the share buy back, especially if trading conditions are not ideal, or if the bank lending is constrained due to general economic conditions
7) In the absence of commercial funding being available to the company or the remaining shareholders the family holding the estate of the shareholder may be forced to seek an external third party share purchaser
As someone who has faced this situation in business in real life I can assure you that these sort of risks are very real and potentially very damaging. In our particular case it was serious illness rather than death. Our first thoughts were obviously with the shareholder and his family -thank goodness he made a recovery, though it took some (very worrying) time before he knew that this would be the final outcome. During which time not surprisingly he decided that his priorities had changed and he no longer wanted to be involved with the business. Luckily for us we had the correct life/ critical illness policies and legal agreements in place which meant that at the right time the required funds were in place to finance the share purchase and with no need to take on additional debt. At the same time our eyes were opened to the consequences of how differently things might have turned out had we not been properly insured.
Here’s an odd thing – most businesses think nothing of insuring their business premises for fire. They don’t do so because there is a high risk of the insured event actually occuring, they do it because of the size of the potential financial consequences for the business that would follow a fire. Literally a fire could destroy an unprotected business.
So given the fact that the death or critical illness of a business partner or shareholder is so much more likely to actually occur it might be said that any of the 58% of businesses with no plan referred to in the research (above) are very playing with fire. Sensible action would be to take expert advice on the matter before its too late.