Summary
In this article we explain how Protection Insurance may possibly turn out to be more popular
with the insurance market finally making positive steps that could hopefully be successful.
A lot of trained advisors would be of the same opinion that Financial Protection Insurance is vital to the majority of families, whether it may be a precaution in the event of premature death, prolonged illness, loss of employment (especially in the present economic climate), or cover for an accident.
Life Insurance is the basis of all financial assurance for cover for a mortgage or to ensure a lump sum that is not taxable, in the eventuality of death. Unfortunately, a percentage of other Protection Insurance types, do not do not have equivalent sound qualities and have been labelled as being miss-sold. Also, based on what we are now aware, critical illness insurance has suffered as a result of incredible exclusions from insurance policies making it possible for insurers to reject claims even when they are genuine.
However, a little faith was restored when Aviva reported on the conclusion of claims on Critical Illness Cover on their 1/2 yearly statistics.
Critical Illness Insurance claims were being turned down because customers did not make known their full medical background. As a result Norwich Union reports that in the last 7 months the number of declined claims has plunged substantially from 6.8% in the previous year, to 1.5 per cent.
Why? We think, not only Legal and General but all of the insurers, because of harmful public relations, have been put into a position whereby they must diminish the amount of claims that are rejected. Does this prove how influential the press can be? Debateable perhaps – you may think we are dubious but we believe there are other factors that encouraged the insurers to make changes. Lately, as a result of bad press, sales of Critical Illness policies have fallen which in turn has clearly influenced the insurers profit. This is more likely to have been the catalyst to promote change!
Norwich Union, Scottish Provident, Axa and Friends Provident have instigated some prominent changes expressly created to diminish their rejection rates. Firstly, they outline plainly that all health disclosure, however minor a visit to a Doctor may have been, must be includedmade known. Axa, together with others will get a medically trained person to telephone every applicant to discuss all the details of their medical history. If the life cover policy then goes on risk, a number of policyholders are being informed that it is important that they give complete medical disclosure and they are allowed to add or put right any information on their application.
The life Insurance Company may then re-assess the risk and if it is thought to be increased the monthly payments will probably be increased – which seems more rational and ultimately more appropriate than paying the original payment then having a claim rejected as a result of non-disclosure of health facts.
This action should have been applied by the Insurance Companies a long time ago as the public’s understanding of Protection Insurance has eroded by their somewhat ‘Off the ball’ approach. On a positive note, there is a great need for protection insurance so we can hope that it manages to re-build trust and then the popularity it justly deserves.
You must always make sure that you compare life insurance policies before making your decision. Life Insurance policies all differ both in price and the specifics of each policy.