Summary
This article explains how Financial Protection Insurance may possibly turn out to be more popular
with the insurers at long last making constructive steps that should with any luck be successful.
A lot of trained financial advisors would be of the same opinion that Protection Insurance is necessary to a good number of families, either as a precaution in the event of cover for an accident, loss of employment (especially in the present economic climate), prolonged illness or premature death.
Life Insurance Cover 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. Sadly, a percentage of other Life Insurance policies, do not do not have equivalent sound qualities and have been branded as being miss-sold. furthermore, based on what we know, critical illness insurance has suffered as a result of shocking omissions from insurance policies making it feasible for insurance companies to reject many claims, as genuine as they may be.
In spite of this, some faith was reinstated when Legal and General gave details on the conclusion of claims on Critical Illness Cover on their half yearly statistics.
Critical Illness claims were being rejected because customers did not reveal their complete health background. As a result Norwich Union says that in the last 6 months the number of rejected claims has fallen substantially from 5.7 per cent in the last year, to 2.3%.
Why? We think, not simply Aviva but all life insurance companies, because of destructive publicity, have been placed in a situation whereby they must diminish the amount of claims that are rejected. Does this prove how powerful the media can be? Debateable perhaps – you may think we are doubtful but we think there are other factors that encouraged the insurers to make adjustments. More recently, as a consequence of bad press, sales of Critical Illness policies have fallen which in turn has visibly affected the insurance company’s profit. This is more likely to have been the catalyst to promote change!
Norwich Union, Scottish Provident, Axa and Friends Provident have introduced some prominent changes specially designed to reduce their rejection rates. To begin with, they outline plainly that all medical disclosure, however insignificant a visit to a Doctor may have been, must be revealed. Scottish Provident, among others will get a medically trained person to telephone every candidate to go through all the particulars of their medical history. If the policy then goes on risk, some policyholders are being told that it is vital that they provide full medical disclosure and they are allowed to add or correct any information on their application.
The Life Insurance Company may then re-assess the risk and if it is believed to be increased the monthly premium will likely be increased – which looks more sensible and eventually more satisfactory than paying the original premium then having a claim rejected because of non-disclosure of medical records.
This process should have been put into operation by the Insurance Companies a long time ago as the public’s perception of Protection Insurance has eroded by their somewhat strange approach. On a positive note, there is an obvious and essential need for protection insurance so we can hope that it manages to re-build trust and then the popularity it justly deserves.