Summary
Protection Insurance is a necessary product, will it become more popular? The right moves are at last being made by the insurance market. We hope that they are successful. Read this article to find out what is now happening in the insurance market.
Few specialist financial advisors would dispute that protection insurance should be the core of most family’s financial planning whether it’s protection against the detriment of premature death, accident, long term illness or (particularly now with the arrival of the credit crunch), cover for unemployment.
Life assurance is rightly the basis of financial planning whether it be put in place to protect your mortgage or provide a tax free lump sum for your dependants in the event of your death. Alas, some other forms of protection cover have a less attractive reputation. Payment Protection insurance has a reputation for being miss-sold and cic protection has in the past suffered from rampant policy exclusions which make it possible for the insurers to reject a large amount of claims, even if they appeared valid.
But last month a flicker of light transpired when Norwich Union made known its 1st half figures on the outcome of claims on its critical illness insurance policies. These figures seem to indicate that at last the question of unintentional disclosure of health particulars when the policy application is completed, is being resolved.
A little while ago critical illness insurance claims were being repeatedly turned down on the merest hint that the client had omitted any slight health condition – even a foot infection or a sore throat! According to the figures presented by Norwich Union, their claim refusals have reduced sharply from 6.8 per cent the previous year to 1.5 per cent in the previous 6 months.
How did this come about? Axa, Scottish Provident, Friend Provident, Norwich Union, LV and Scottish Equitable have launched a variety of alterations designed to decrease their rejection rates. They start off with an absolutely obvious explanation of the importance of complete medical revelation right down to when they last went to their Doctor no matter how inconsequential the reason. And some life cover companies such as Legal and General get a medically trained person to telephone each potential client to go through their health history in detail. Then when the policy goes on risk, some companies are telling again the insurance holders of the importance of full medical disclosure and giving them the opportunity of adding or correcting the details on their application.
If the additional details are assessed as increasing the insurer’s risk, then the insurance company will certainly without doubt increase the monthly payment – but that is certainly far better than paying the original premium for years and years and then getting a claim rejected.
The insurers should have taken path a long time ago as their slowly, slowly attitude has damaged the public’s view of protection cover. Nonetheless there is an absolute need for protection insurance so let us hope that it achieves the status its so richly deserves.