Most professional advisors would be of the same opinionthat Financial Protection Insurance is vital to a good number of families, either as a safeguard in the event of cover for an accident, loss of employment (especially in the present economic climate), prolonged illness or premature death.
Life Insurance is the foundation of all financial assurance to ensure a lump sum that is not taxable, in the event of a death or for cover for a mortgage. Unhappily, a proportion of other Financial Protection Insurance policies, do not have the samedo not have similar} reliable qualities and have been branded as being miss-sold. Also, based on what we know, critical illness insurance has suffered due to incredible omissions from insurance policies making it possible for insurers to reject a claim even if it is genuine.
In spite of this, some confidence was reinstated when Aviva reported on the conclusion of claims on Critical Illness policies on their half yearly accounts.
Critical Illness claims were being refused because clients did not disclose their complete health background. As a result Standard Life says that in the last 5 months the number of refused claims has fallen significantly from 5.7% in the previous year, to 2.3 per cent.
Why? We believe, not only Standard Life but all insurance companies, because of damaging publicity, have been put into a situation whereby they must reduce the amount of claims that are rejected. Does this confirm how strong the media can be? Debateable perhaps - you may think we are sceptical but we believe there are other issues that urged the insurance companies to make adjustments. A short time ago, as a consequence of |bad press|dire media}, sales of Critical Illness Cover have dropped which in turn has obviously influenced the insurance company’s profit. This is more likely to have been the catalyst to promote change!
Scottish Provident, Friends Provident, Axa and Norwich Union have instigated some prominent alterations expressly created to diminish their rejection rates. Firstly, they silhouette plainly that all health disclosure, however insignificant a visit to a Doctor might have been, must be revealed. Axa, among others will get a Doctor or Nurse to phone every candidate to discuss all the particulars of their medical history. If the insurance policy then goes on risk, a number of policyholders are being informed that it is essential that they give full medical disclosure and they are allowed to add or correct any details on their application form.
The Insurance Company may then re-evaluate the risk and if it is believed to be increased the monthly payments will probably be raised – which seems more reasonable and ultimately more acceptable than paying the original payment then having a claim rejected owing to non-disclosure of medical information.
This process should have been applied by the Insurance Companies years ago as the public’s perception of Protection Insurance has deteriorated by their somewhat ‘Off the ball’ approach. Without doubt, there is an obvious and essential need for protection insurance so we can hope that it is able to re-build trust and then the popularity it rightfully merits.
