Protection Insurance – Insurers Clean Up Their Act
Summary
Protection Insurance is a necessary product, will it become more popular? The right moves are at last being made by the life insurance market. We are hoping that they succeed. This article gives a clear explanation.
Few expert financial advisors would’nt disagree that protection insurance should be the foundation of most peoples financial planning whether it’s guarding against the consequences of premature death, accident, long term illness or (particularly now with the arrival of the credit crunch), cover for unemployment.
Life insurance quotes are understandably the basis of financial planning whether it be put in place to insure your home owner loan or give a tax free lump sum for your loved ones in the event of your death. Unfortunately, some other types of protection insurance have a less attractive status. Payment Protection insurance has a reputation for being miss-sold and critical illness insurance has historically suffered from widespread policy exclusions which permitted the insurers to refuse an extremely large amount of claims, even if they seem valid.
But last month a glimmer of light emerged when Scottish Provident gave out its first 1/2 figures on the outcome of claims on its critical illness policies. These figures appear to mean that at last the problem of unintentional disclosure of health particulars when the policy application is concluded, is being resolved.
Some years ago mortgage insurance claims were being repeatedly refused on the merest suggestion that the client had omitted any slight medical detail – even a foot infection or a sore throat! In line with the figures reported by Scottish equitable, their claim rejections have come down sharply from 6.5% the previous year to 1.5% in the previous six months.
Why is this? Scottish Equitable, Norwich Union, Friends Provident, LV, Axa, and Scottish Provident have put forward a variety of alterations planned to reduce their rejection rates. They start off with an very clear explanation of the magnitude of full health disclosure right down to when they last visited their Doctor no matter how slight the cause. And some companies such as LV get a medically trained person to ring each potential client to talk through their medical history in detail. Then when the policy goes on risk, some insurance companies are telling again the policyholders of the requirement of full health disclosure and giving them the chance of adding or correcting the details on their submission.
If the latest details are assessed as increasing the life insurance companies risk, then the insurer will inevitably put up the monthly premium – but that is without doubt far better than paying the previous payment for years and then having a claim rejected.
The insurers should have taken course a long time ago as their slowcoach method has spoilt the public’s perception of protection cover. Nevertheless there is an undisputedneed for protection insurance so let us wish that it gets the status its so rightly deserves.
