Summary
During the “Credit Crunch” Protection Insurance has been a useful product, will it become more popular? The Insurance Companies are now taking the right steps. We hope that they are successful. This article gives you the facts.
Not Many expert financial advisers would’nt disagree that protection insurance should be the basis of most peoples financial planning whether it be guarding against the consequences of early death, long term illness, accident or (particularly now with the arrival of the credit crunch) cover for unemployment.
The best life insurance is rightly the basis of financial planning whether it be used to protect your home owner loan or supply a tax free lump sum for your loved ones in the event of your demise. Unhappily, some other kinds of protection cover have a less enviable reputation. Payment Protection insurance has a reputation for being miss-sold and critical illness cover has in the past suffered from widespread policy exclusions which permitted the insurers to decline a high number of claims, even if they seem valid.
But last month a flicker of light materialised when Scottish Equitable made known its first 1/2 figures on the outcome of claims on its critical illness insurance policies. These figures seem to signify that at last the problem of unintentional disclosure of medical particulars when the policy application is concluded, is being resolved.
Only a few years ago critical illness cover claims were being repeatedly refused on the merest suggestion that the client had left out any minor medical condition – even a foot infection or a sore throat! According to the figures reported by Legal and General, their claim rejections have reduced sharply from 6.5 per cent last year to 1.3% in the last six months.
Why has this happened? Axa, Scottish Provident, Friend Provident, Norwich Union, LV and Scottish Equitable have put forward a variety of amendments calculated to reduce their refusal rates. They start with an absolutely obvious explanation of the significance of complete medical revelation right down to when they last saw their Doctor no matter how slight the cause. And some companies such as Friends Provident get a medically trained person to phone each applicant to go through their medical history in more detail. Then when the life insurance cover goes on risk, some insurance companies are telling again the insurance holders of the importance of full health disclosure and giving them the opportunity of correcting or adding the information on their application.
If the latest details are assessed as increasing the insurer’s risk, then the insurance company will inevitably increase the monthly premium – but that is definitely far better than paying the original premium for years and years and then getting a claim rejected.
The insurers should have taken route years ago as their slow-coach style has spoilt the public’s perception of protection insurance. Nevertheless there is an absoluteneed for protection insurance so let us wish that it reaches the recognition its so richly warrants.
