LIFE AND CRITICAL ILLNESS COVER - WILL YOUR PROVIDER PAY?
Taking out any type of insurance is always a bit of a leap in the dark. You pay the insurer the premiums each month or year and hope that they will stick to their side of the deal by meeting claims honourably and swiftly at the time when you need them most.
Life and critical illness insurance is different to most classes of insurance. If you have contents insurance and a bike gets stolen outside your house and the insurer doesn’t pay because it isn’t adequately locked, you’re going to be unhappy, you may even cancel the policy and move your business elsewhere, but it usually isn’t the end of the world. Life goes on. With Life Insurance and Critical Illness cover, it’s usually an absolute catastrophe!
It may surprise you to know that insurers actively WANT to pay claims. Even after they have paid these, they still make huge profits each year usually. Many insurers (particularly life and critical illness insurers) actively publish their claims record to reassure policyholders that they are there to pay claims not reject them. It may also surprise you to learn that with life insurance around 99% of claims are paid. With Critical Illness the figures are lower but still usually well over 90%.
Insurers use these impressive statistics as a ‘sales tool’ to attract new business and they are continually striving to improve their figures. Over the last 10 years the figures have improved considerably. We believe this is due to the fact that insurers now send a copy of the completed application to the client as the application is progressing, asking them to check their answers again, warning them of the fact that benefits may not be paid if they are incorrect. This effectively gives the applicant ‘another chance’ to look through the application on their own, without the influence of an adviser or sales-person standing over them telling them that they don’t need to disclose something as its unimportant when really they definitely should!
Why are claims rejected.
Claims are usually rejected for 2 reasons. The policyholder has not disclosed or misrepresented information relating to their original application. Typically, around 2-3 % of claims are rejected for this reason. It is vital therefore that that you provide accurate answers to each question you are asked by the insurer. If you smoke a few cigarettes a year, for example when you are out socialising, you are a smoker. Clearly your risk profile is much lower than those who smoke daily, but you still smoke and will be classed as a smoker when your application is underwritten. The other 5% or 6% of critical illness claims are rejected as the claim does not meet the definitions set out in the policy.
How do Military Direct help with this
As we are a telephone based service, we will go through the application with you asking you the questions the insurer we are placing the business requires answering. We will then email you a copy of this, together with the rest of the documentation for you to consider. You can call us anytime to amend this and with most insurers, we can amend the application online.
It is then re-sent to you. Independently, the insurer will also send you a copy and ask you to confirm it is correct or amend the application where required. They will chase you and warn you of the risks of non-disclosure until they receive confirmation from you that it is correct, or for several weeks for some insurers -before they give up!
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