Protection Insurance – Insurance Companies Come Clean
Summary
Protection Insurance is a necessary product, will it become more popular? The Insurance Companies are now taking the right steps. We hope they will be successful. Read this article to find out what is now happening in the insurance market.
Not many expert financial advisers would disagree that life cover should be the basis of most peoples financial planning whether it be safeguarding against the consequences of premature death, long term illness, accident or (particularly now with the arrival of the credit crunch) cover for unemployment.
Life assurance cover is justifiably the root of financial planning whether it be used to insure your home owner loan or give a tax free lump sum for your dependants in the event of your death. Unhappily, some other forms of protection insurance have a less enviable reputation. Payment Protection insurance has a name for being miss-sold and critical illness cover has formally suffered from uncontrolled policy exclusions which enabled the insurers to refuse a large number of claims, even if they seemed legitimate.
But over the last few weeks a shimmer of light emerged when Scottish Provident gave out its 1st half figures on the result of claims on its critical illness insurance policies. These figures appear to mean that at last the problem of unintended disclosure of medical information when the policy application is concluded, is being resolved.
Some years ago critical illness insurance claims were being time after time refused on the merest hint that the client had omitted any minor medical detail – even a foot infection or a sore throat! According to the figures presented by Standard Life, their claim refusals have come down sharply from 6.7% the previous year to 1.5% in the previous 6 months.
Why has this happened? LV, Scottish Equitable, Norwich Union, Scottish Provident, Axa, and Friends Provident have initiated a collection of changes designed to diminish their refusal rates. They start off with an extremely clear explanation of the importance of full medical revelation right down to when they last visited their Doctor no matter how minor the reason. And some insurance companies such as LV get a medically trained person to telephone each potential client to discuss their medical history in detail. Then when the policy goes on risk, some insurance companies are reminding the insurance holders of the importance of full medical disclosure and giving them the option of correcting or adding the details on their submission.
If the new details are considered as increasing the insurer’s risk, then the life insurance company will certainlywithout doubt raise the monthly premium – but that’s certainly far better than paying the previous premium for years and years and then getting a claim refused.
The insurers should have taken this action a long time ago as their slow coach method has damaged the public’s perception of protection insurance. But there is an undoubted need for protection insurance so let us hope that it achieves the recognition its so rightly warrants.