I’ve no idea about insurance – where do I start?
Every day, our advisers speak to people the length and breadth of the country who are looking to put insurance in place to protect the things that matter most to them; their family, their homes, and their income.
Many of the questions we get from our customers center around health and lifestyle disclosures, and whether or not they’re likely to have an impact on their insurance premiums:
“I have a medical condition, will the insurer accept me?”
“My job involves me working within a dangerous environment, can I still get cover?”
“If there is a history of medical issues in my family, does that affect my cover options?”
Many of these are valid questions, and we applaud those who are conscientious enough to look at putting protection in place with the forethought to ask such things.
The reality is that many don’t ever get this far as they’re either not aware of the importance, or act upon the matter of ensuring they have adequate resources in place in the event of long term illness or death. There is very little advertising in the mainstream media for life insurance, critical illness or income protection, so it’s no wonder that research in 2016 by Financial Service website of the year ‘This In Money’ indicates that one in four breadwinners don’t have life insurance leaving their families with a cover gap of £263 billion.
Charity led campaigns such as 7Familes (www.7families.co.uk) look at financial impact of a suffering a serious long term illness or disability, and demonstrate the tangible difference of what having protection in place can make to those unfortunate enough to call upon it.
So how have we created such a gap?
The product mechanics themselves are very simple; in the event of a specific event happening, you or your loved ones will receive a financial benefit to help continue life with some financial stability. Sure, there are different types of cover available, but in essence this is what they will all do. Some will pay out in the event of death, others will pay out in the event of diagnosis of a specified serious illness (such as cancer or a heart attack), and others will pay a monthly benefit if you’re unable to work due to an illness (physically or mentally).
Despite the historic bad press that some insurance has had around insurers not wanting to pay claims, I’m happy to break that misconception – this hasn’t been the case for many years! The UK Protection industry alone paid out over £3.6 billion in 2015 (ABI Claim Statistics 2015). Of the 132, 788 claims received, insurers paid out 129,136 – that’s 97.2% of claims. Those declined were primarily down to either the claim not meeting the required definition, or the client not fully disclosing information on their application. So, the facts show that insurers DO pay claims! There will always be bad press, whichever industry you’re involved in, however we need to look at the bigger picture.
To help reduce those claims not being paid out, I come back to my original point around searching for the answers from outset; questions that our customers ask on a daily basis – so here’s a few helpful tips for you:
Always tell the truth, and be open and honest from the outset
Our advisers are experts within Protection…they live and breathe it. They can ensure that all questions are accurately provided to the insurer, ensuring there is no ‘grey’ in whether or not a claim would be paid out due to not fully disclosing information on the application. Having received medical training from some of the largest insurers in the UK, they can speak competently about the different medical conditions you may need to disclose, allowing you to feel at ease in discussing your health and lifestyle. They know the questions that insurers will ask, and they know the hoops you may need to jump through in order to get your cover in place, whether it’s a report from your GP or attending a medical appointment, and will set that expectation with you right from the start.
If you’re not sure about anything, just ask!
Too frequently we hear about customers who have delayed putting cover in place simply because they didn’t understand the options they had been provided with by their adviser or on a comparison site, and only realized acting upon the need when it was too late. We’re passionate about ensuring all of our clients are fully informed about their options, and understand what cover they are taking out. The independent reviews from our customers provide are testament to our dedication in ensuring each and every client has their cover tailored to their requirements in a non-pressured, no hard sell environment – these can be viewed on Feefo by clicking here.
Find out what existing cover you may have in place
As years go on we can often forget what policies we may have arranged in the past. Take a few moments to go back over your bank statements and look for any direct debits from insurance companies; give them a call and find out what insurance you have in place. Also, contact your HR department and see what benefits you get from your employer – you may be surprised about how financially exposed you are should you be off work due to long term illness or injury. We have a handy template for this on our website – you can find it just above the frequently asked questions.
Cheapest isn’t always best!
We all want to get the best deal possible, and often we interpret that as coming at the lowest cost. However, when it comes to some policies such as Critical Illness cover, the insurance companies vary dramatically in terms of what conditions they cover, and the severity level at which they will accept a claim. Our advisers use the most sophisticated sourcing tools to establish which insurer will provide you with the most comprehensive cover. This may not be the cheapest insurer, however we will explain the differences between them, what impact this makes on the cost, and tailor the cover ensuring you’re satisfied you have the best solution in place to protect you and your family.
No two insurers are the same
This is particularly important if you’ve tried applying elsewhere already. Where one insurer may say no, or increase your premium due to a health or lifestyle disclosure, another may accept you with no increase whatsoever. Few insurers operate in the same way, each will have their own underwriting criteria when it comes to medical conditions or lifestyle disclosures. Whether it’s something as simple as a skewed BMI (overweight or underweight), working in a particular occupation such as a pilot, firefighter or farmer, or if you enjoy recreational sports such as scuba diving or mountain climbing, every insurance company will assess your application differently.
Where possible, write the policy into Trust
This will ensure your loved ones receive the proceeds in the quickest time possible without becoming taxable as part of your estate. If you don’t do it, you could lose up to 40% of the policy sum assured to the tax man! There are no charges for writing your policy into Trust, and our advisers will complete and walk you through the paperwork.
If you have questions about protecting your family, home or income, please get in touch with our team on 0800 988 36 37. No hard sell, no pressure. Find out your options, get to know how the products work, and if you feel you need to do something about it, we’ll be on hand to help.
Paul Reed – Protection Specialist and Co-founder of Vita – an independent, national award winning, insurance brokerage in Cardiff.