Buying UK life insurance if you have medical
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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