The Non Disclosure Issue with Critical Illness Insurance

Suppose you find yourself in the terrible situation of needing to submit a claim on your critical illness insurance policy. In that case, the last thing you want from your insurer is indifference or seeming non-cooperation. However, multiple media stories claim that this is precisely what is occurring. The main issue is that the insurer will always want to do extensive research into your previous medical history before paying out. While you'll have given them much identical information when you first sought coverage, the insurers will now insist on double-checking everything. And if you indicated you weren't a smoker at the time, they'll want your doctor to confirm it today.

Justifications and Claims

The reasons are self-evident. They're dealing with a large claim, usually over £100,000, and they want to make sure you gave them the whole truth about your health when you applied. After you've filed your claim, they'll go over your medical records in great detail to make sure you've revealed everything on your application. Every seemingly unimportant aspect will be scrutinized in great depth. On the other hand, their reams of letters might be somewhat disturbing for you.

The insurers defend their methods, claiming that they need to know that you spoke the truth about all of the conditions that impact your health when they accepted your business. They want to make sure you didn't lie about anything to trick the firm into providing a policy when they wouldn't have otherwise or to assist you in qualifying for a cheaper premium. Non-disclosure, as they term it, is cheating in any case and a sufficient cause for them to reject your claim. It would make no difference if the facts you left out had nothing to do with the condition that led to the lawsuit. According to the insurers, every piece of information you submit is considered to calculate your premium, and every omission impacts the computation.

period of the policy

If the claim occurs during the first five years of the coverage, the insurers are exceedingly wary. Any claim made during this time is considered an "early claim," and insurers are especially mindful of customers who purchased critical illness insurance while already believing they were sick.

The issue is that all of this intensive scrutiny generates a lot of negative news. When you're ill and worried, the last thing you need is a barrage of inquiries from your insurance company.

There is, without question, a conflict here. Insurance firms must work considerably harder at smoothing the investigation process and engage much more closely with their claims if they want to counteract the negative headlines. When claimants are most distressed, insurers must offer a much softer core.

This negative publicity has had two implications on the market for critical illness insurance. Applicants seem to have chosen insurers with the lowest rejection rates, while others have decided not to apply.

Avoiding insurers with high rejection rates has no practical value. This is because reported data might be deceiving. According to the latest numbers, Scottish Equitable Protect has refused to pay out 28% of critical sickness claims, followed by Friends Provident with 25%. When these percentages are compared to Scottish Provident's 13.7 percent, it's easy to see why many prospective policyholders would choose Scottish Provident. However, this isn't always the most excellent option.

The difficulty with understanding these numbers is that the numbers themselves might be skewed by the time the insurer has been in the critical illness market. Because plans that have just been in effect for a few years have the most significant rejection rates, firms new to the critical illness market will have the highest rejection rates. With a rejection rate of under 10%, organizations like Guardian Financial Services seem to be doing well. The fact is that the Guardian has been in business for nearly 15 years and has a well-established client base.

Insurance:

And it's a shame that this lousy press has lowered people's faith in critical illness insurance. This insurance, in our opinion, serves a crucial role in preserving family finances, but many individuals are hesitant to get it, leaving their family vulnerable if they become critically sick. After all, if the family's primary source of income becomes critically ill, the family's income may suffer. As a result, the tax-free lump amount paid out by this insurance might become critical to a family's financial well-being.

If you experienced "declined my Critical Illness claim", please contact me here.