Monthly Archives: December 2008

Author : Michael challiner

Hearing that you have cancer is devastating news At some stage in our lives, one in three of us will suffer from the disease It is not surprising that BUPA found that of all diseases, cancer gives Britons the greatest concern

At this difficult time you would expect an immediate pay out by your health insurance company, enabling you to concentrate on getting better Sadly you could receive a big shock Many cancer patients make a full recovery thanks to advances in medical science Nowadays some cases are not even looked upon as serious, so it is alarming to learn that many health and life insurance policies only pay out when your condition is terminal or life threatening

Peter Chadborn, an independent financial adviser, warns that people should not presume that they will receive a pay out just because they have been diagnosed with a serious condition He advises people not to focus on the cost alone when taking out insurance, but to read the small print in a private medical or critical illness policy to ensure that the company will pay you when you need it most

On the diagnosis of a specific condition, critical illness cover will pay out a lump sum Whereas you will receive improved quality and speed of treatment with private health/medical insurance For example, suitable licensed drugs maybe available, which are not dispensed on the NHS Matt Morris of independent advice firm LifeSearch says about 16 per cent of claims fail on protection policies and at least half of those are rejected because they dont match the criteria for a serious illness

An example of a claim, which may fail is a slow growing, localised cancer, like a non-aggressive skin cancer, because it does not threaten your life It is often thought that applications for a pay out fail because a pre-existing condition has not been mentioned, but actually more people dont receive a pay out because their condition is not severe enough Mr Morris adds that policies should pay out for severe illnesses and diseases However some cancers sound worse than they are and in these cases you probably wont receive any money from traditional policies

At one time insurance companies had an all or nothing approach, but they are now starting to offer policies with a full or partial payout An example is PruProtect, an alternative critical illness policy from the Prudential, which relates the size of the pay out to the severity of the illness and how much hardship it will cause This policy does not become void once a claim is made but subsequent pay outs may be reduced significantly This feature is particularly important when the patient is diagnosed with a stage-one or stage-two cancer, which may become even more serious

Recently the insurance industry addressed the vexed issue of customer non-disclosure The Association of British Insurers has brokered a new agreement, which will enable claims effected by non-disclosure to receive a partial or full pay out, which has not been the case in the past

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Author : Michael challiner

Premiums for Critical Illness Cover (CIC) are escalating due to the rising number of claims and concern about medical advances in the future Once diagnosed with a life threatening illness, CIC pays you a tax free lump sum, which will support you financially if you are off work due to illness

Two major insurance companies will be increasing the cost of cover shortly Legal and General’s premium will increase by 20 to 25 per cent and that of Swiss Life by 20 per cent These increases are small when compared with the 50 per cent imposed by Friends Provident and BUPA and the 60 per cent announced by Norwich Union and Scottish Equitable Liverpool Victoria are still considering what increase they will impose next month

The insurance industry is in turmoil as advances in medical science help patients to survive illnesses, which would have been terminal only 10 years ago The effect of this sea change in medical insurance is that life insurance claims are decreasing whilst pay outs on critical illness policies have seen a sharp rise Consequently the cost of life cover is dropping, whilst that of critical illness cover is rising rapidly

In an attempt to reduce the sharp rise in premiums, the Association of British Insurers has amended the conditions under which cover is provided for prostrate cancer and heart problems

Many sufferers are now finding that early detection of these conditions results in longer life expectancy The conditions under which CIC policies pay out are being redefined This development will help to reduce the number of claims and consequently slow down the rate at which premiums are increasing (For example, critical illness cover will not pay out for skin cancer unless it is invasive)

Kevin Carr of broker’s LifeSearch says that critical illness policies currently cover conditions, which are easier to detect and treat Claims are therefore being settled for non-life threatening conditions, which is not the purpose of the policy

A review of the terms of many policies is likely in the future CIC for diabetes is being removed by Swiss Life, which leaves BUPA as the only insurer that includes this condition

Reviewable policies are now being offered by an increasing number of insurers Illnesses and premiums covered by these policies are reviewed every five years A typical CIC is a guaranteed policy, which runs for a stipulated number of years The premiums stay the same whilst the cover is in force, which is normally the term of their mortgage However this type of cover is becoming more costly

The Group Director of Liverpool Victoria’s independent financial adviser division, Rye Mills says that you have to pay for the reassurance that a guaranteed policy offers He adds that people are more likely to choose a renewable rather than guaranteed policy as the increase in cost widens Whilst Legal and General increases it’s CIC it is also launching a reviewable policy thus giving customers a choice Skandia has withdrawn it’s guaranteed CIC, whereas Scottish Widows is only offering reviewable cover

It is understood that Legal and General’s reviewable price will be about 15% lower than the guaranteed cover If you have a guaranteed CIC it cannot be amended to include new definitions of illnesses

Mr Carr from LifeSearch believes that although premiums on reviewable policies maybe cheaper customers would rather have a guaranteed policy He suggests that if you don’t already have cover it would be prudent to take it out now before any further changes are announced

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Author : Michael challiner

The mis-selling of life insurance policies by a significant number of mortgage lenders has to be addressed by the Government Action has been taken by the DTI, who have nearly completed their investigation into the tie in of home insurance with mortgages An announcement barring the practice is expected very shortly

However the investigation has been criticised by some senior figures in the industry for ignoring the selling of life cover The criticism centers around the practice of overcharging for life insurance, whilst not offering sufficient choice of products as part of their mortgage packaging Ray Bolger from John Charcol, the independent financial adviser, says that the DTI’s knowledge of mortgages fall short of the standard required to make their investigation credible The result being that life cover has been overlooked

Mr Bolger believes that just as some providers have been called to account for tying building and content insurance to a mortgage, so should the sizeable number of lenders who mislead people into thinking that they have to take out life cover with their mortgage Mr Bolger continues by saying that although lenders may not insist on customers taking out life insurance, they can be persuaded that they have no choice through being economical with the truth

60 per cent of life insurance is sold by mortgage lenders, although it can be purchased through direct providers or independent advisers

However a DTI spokesman has said that their investigation continues into a large range of insurance tie-ins A lender who met Stephen Byers has said that life cover has been looked at in passing, whereas more emphasis has been placed on home insurance

The problem of customers being forced to buy uncompetitive life cover and home insurance policies is equally important for both products

The problems are even more acute with payment protection insurance (PPI) Around half of all consumers who have been persuaded to take out a payment protection insurance (PPI) may have been sold the wrong product In addition the majority of those who bought one of these controversial policies expect far more than they would actually receive if they could not pay their bills

A wide-reaching survey has found that around 25% of people believe that they will earn a monthly income from their PPI policy, rather than understanding the policy would only cover their debts

A further 15% said they believed the policy would cover them if they could no longer meet their repayment obligations for any reason, and 8% said they thought their medical bills would be paid if they fell ill

Several people thought the policy would continue indefinitely to meet their debt repayments, others thought their policy would cover motor car breakdowns and household bills

Annual sales of PPI policies are said to generate premiums of around 5 4bn for the finance industry However a staggering 4bn of this is said to be pure profit Studies suggest that some banks charge up to 600% more than others for similar

The Office of Fair Trading is investigating the sale of PPI following complaints from Citizens Advice and the National Consumer Council It recently highlighted concerns that banks are luring in customers by advertising apparently cheap loans and then hitting them with huge extra costs by selling expensive PPI as part of the deal As a result, a loan which may appear to offer good value turns out to be far more expensive

The Life-insurance-Policies.co.uk are specialist in Life insurance policies, offering fantastic deals and truly impressive information surrounding insurance and critical illness. Our sister site Brokers Online offers cutting edge articles and information about Life insurance and other financial products. Continue reading →