Critical Illness Cover - 2005 Claims Update

A couple of months ago we looked at critical illness in depth with our 3 part guide 'Critical Protection Issues'.

Visit the link below to read these.

http://www.medicaldentalfs.com/independentfinancialadvice/protection

We thought it was worthwhile revisiting this now as another major insurance company, Standard Life, has now released their 2005 data for claims paid.

The key findings are:

- they paid out a total of £19.8 million on 342 claims (average of
£58,000 per claim)

- 82% of claims were paid in 2005 compared to 80% at the last full year review

- 18% of claims were rejected

- of these, 10% were declined as the claim did not meet policy definitions

- 8% were declined due to non-disclosure (read more on this below)

- 63% of claimants were aged 40-59

- 32% were aged 0-39

- 5% were aged 60+

- 52% of claims were for cancer, followed by heart attack at 13%

and lastly…

- two thirds of claims were made by those who had had their policies
for more than 4 years

The issue of non-disclosure is crucial.

When applying for critical illness cover you need to disclose ALL your current and past medical details on the application form. This sounds pretty sensible and straightforward, however there ARE many applicants who are not following this guidance.

Using the Standard Life figures, 8% of rejected claims for non-disclosure equals 27 claims, which is £1.58m at £58,000 per claim.

Insurance companies will also probably decline a claim even if it is unrelated to the data that has been witheld.

You have been warned…  

The Key Considerations

When you are looking for critical illness cover take your time with the application and make sure it includes ALL your medical details, past and present.

If you are purchasing the policy through a financial adviser you should complete all the health questions on the form to ensure there is no doubt about any of the questions being asked and your answers.

Also, don't make the mistake of choosing the cheapest policy. You should check all the small print FIRST and then look at the price.

This is very important as it's likely that once you've been accepted for cover you won't be looking to cancel the plan for some time (if ever), especially as the cost is likely to increase as you get older.