When you are considering insuring yourself and your family against illness, one important consideration is what you’re NOT insured for.
Our current health crisis has shown us that. The Association of British Insurers (ABI) tells us the Coronavirus has not yet been accepted as an illness that would trigger a payout of critical illness (CI) insurance, under their guidelines, if you were one of those unlucky enough to contract the disease.
The ABI’s guidelines form the basis for formulating many CI policies available from their members, and their current view is: “Critical illnesses are identified under a specific set of criteria and Coronavirus is not a specified critical illness under the ABI guide to minimum standards for critical illness cover.”
What is more important, however, are the conditions that ARE covered, and new evidence that insurers are now working hard to pay out nearly all claims, querying only a very few which are seriously flawed or invalid. The most recent numbers show that UK insurers paid out 17,995 claims last year, that’s 98.3 per cent of total claims, and it’s a record for the industry.
In other words, CI insurance has never been more reliable and dependable.
Why should you consider CI, and how does it work?
CI covers you against the most common forms of severe health problems: cancer, heart attack, stroke, MS, or major surgery.
The ABI tells us cancer is the biggest single reason for an individual critical illness claim, and figures from the National Statistics Office confirm that more than half of us will get some form of cancer in our lives.
Another good reason to consider CI cover is the second major health problem mentioned here, heart attack and heart disease. Seven million people in the UK have a heart and circulatory disease, with an average of 545 each day suffering a heart attack.
Cancer, stroke and heart attacks account for 80 per cent of critical illness claims to major insurers. When you add in MS, Alzheimer’s and motor neurone disease, you’ve accounted for 90 per cent of all claims.
Why should you consider CI, if you haven’t got it already? The simple answer is to protect your family and yourself against the loss of your income, if you are among the one in four men, or the one in five women who will fall critically ill at some time before they reach retirement age.
It’s not simply that you lose your income, though, you are also faced with a whole range of new costs you didn’t have before. Just to take one example showing the hidden costs of illness, we can look at cancer, the biggest critical illness of all.
Macmillan, the cancer charity, points out that, just as you lose your income, critical illness sends your health costs soaring. They say that, while cancer sufferers lose an average of £860 a month in earnings, they suddenly find themselves confronted with a bill for £270 a month in treatment-related expenses: travel costs for appointments, hospital parking, increased heating bills, and the cost of some over the counter medications.
Now we know why CI could be crucial for you – now let’s look at why is it advisable to talk to a financial adviser, when setting up your policy.
Well, first there’s the small print. There are many policies available, all cover much more than the ‘core conditions’, i.e. the most common illnesses I mentioned above. That’s why it’s important to allow us to explain what you are covered for – and what you’re not.
Then there are the mistakes that can happen, when making an application for cover. The ABI points out that, while it is satisfied with that 98.3 per cent payout rate I mentioned, the single biggest reason for the very few rejected claims as “non-disclosure.”
Cases of deliberate failure to be honest with the insurer, when they are setting up your policy, come in many forms. People may, for instance, have failed to disclose a pre-existing medical condition, or to declare lifestyle choices such as a tobacco, alcohol or drugs habit, which later arguably play a role in bringing on their illness. It may also transpire that an illness could derive from ‘unreasonable failure to seek or follow medical advice.’
But more common is ‘inadvertent non-disclosure’ where you were perfectly honest with the insurer up front – or at least you thought you were. There have been times when someone becomes ill and makes a claim, but the insurer’s checks on family health records digs up a skeleton in the closet.
As an honest claimant you may, for instance, have believed there was no family history of major health issues, only to find out later your father had a heart attack he never talked about. As a result, you have inadvertently withheld information for the simple reason that you were unaware of it.
Critical Illness insurance makes a lot of sense, and taking the advice of a qualified, independent financial adviser when protecting yourself against most serious health conditions makes even more sense.
Even if the Coronavirus is not on the list.
Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice or via www.mkennedyfinancial.com
