The Financial Conduct Authority
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Buying UK life insurance if you have medical difficulties

When you approach an insurer to purchase life insurance, they will ask a series of questions to establish the individual ‘risk’ factors. This enables them to assess the risk as a commercial consideration and calculate premiums accordingly. Where this process reveals medical problems, some insurers may decline to offer cover.

Not all insurers adopt the same stance; some companies will specialise in certain types of higher-risk cover and thus are often able to quote competitively. Before quoting terms, an insurer will evaluate your medical history asking about your prescribed medication, the duration of your condition, and similar health-related issues.

Where further clarification is needed, other methods may be adopted to gather the precise information the company needs to make an informed decision. In a few rare instances, a quote might be subject to the outcome of an initial medical examination. More often, insurers will decide your life insurance enquiry needs ‘medical underwriting’ which means they will ask for a full medical history, and perhaps details of your lifestyle and occupation too. Though time-consuming, this means insurers quote on your personal circumstances and not generalised assumptions. Sometimes this approach can be fast-tracked where insurers are prepared, with your permission, to phone your GP discuss to your medical history. Where this is done, insurers accept responsibility for any costs the process incurs.

With preliminary enquiries complete, the outcome of the underwriting process will determine whether the insurers will accept the risk, and on what terms. Essentially, there are three possible strategies a company may adopt. With the first – a policy free of exclusions – the company will agree to a policy which pays out regardless, even if the claim was triggered by a pre-existing medical problem. Under the second option, the company may offer general life cover subject to the exclusion of claims for a specified pre-existing medical issue. Finally, a third option would offer full life cover without exclusions subject to a ‘loaded’ premium to reflect the higher risk the company accepts in the light of your disclosed medical problem.

Given this is a relatively complex process; it is wise to enlist the support of a specialist financial adviser who will research the market and evaluate the offers you receive. Similarly, you should participate fully and honestly with insurers, disclosing full details of your medical history. Any deliberate failure to supply information could subsequently invalidate your policy. With life insurance companies paying out an average claim of £47,166 in 2010 – nearly twice the UK’s average salary – and refusing 16 per cent of claims in 2007, such risks are real and the consequences devastating.

Alongside the invaluable market knowledge your adviser can share, many specialist medical charities can also provide helpful information. For example, cancer charities can explain how insurers rate cancers according to developmental stages, or how your recovery is likely to impact upon future policy options. Similarly, charities have a good updated knowledge about which companies are usually able to offer life insurance cover for the specific medical condition they support.

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