Insurance World

Twenty per cent of critical illness claims are turned down. That means for every five people making this important claim, one will have it rejected at this crucially important time.

The whole reason behind taking out critical illness cover is that, in the event of you becoming critically ill (that is being diagnosed with one of the listed illnesses described in your policy documents) a payment will be made. The reasoning behind your decision to take out what some consider being an important part of your financial planning is sound. Critical illness can affect the whole family. You may have to pay out for child care, change your home or job or even train for a completely new career. Having taken out cover, should the unexpected happen, all eventualities are covered and you have gone as far as you can to minimise financial problems and get down to the important personal matters.

Unfortunately, in a number of cases, this is not so. Failure to disclose what may seem to you to be minor, unimportant illnesses in the past may give the insurers a reason to reject your claim. Fair or not, it’s completely legal! As far as the law stands, if you have failed to disclose information which the insurer was seeking, then the insurer is perfectly within their rights to terminate the cover.

If this happens to you, not only do you have to cope with the implications of the illness, but you have to either accept that your critical illness insurance plans have totally failed you. At this stage depending on the severity of the illness, you may feel overwhelmed by the situation and unable to face challenging the decision. If you do appeal against the decision and the Financial Ombudsman Service gets involved, they will make every attempt to establish whether you deliberately misled the insurers in order to gain cover or whether the questions on the original proposal form were vaguely or poorly written.

As soon as you make a claim on your critical illness policy, your insurer will instigate an extremely thorough check on your medical records. It appears that they can go back without a time limit and if they find anything, related to your illness or not, which you’ve failed to disclose to them, they may choose to refuse your claim. There is no such search or investigation carried out when you take out the policy and some people feel that this should be addressed.

It is virtually impossible to remember every minor illness. Can you really be expected to remember and record every visit to the doctor regarding things like headaches, eye pain, stiff neck, ear infections and depression? There were recent cases where claims were rejected for these reasons – a man had his claim for prostate cancer refused because of failure to disclose an earlier ear infection and a woman whose claim failed because she’d not disclosed an earlier problem with depression.

However, for four out of five people, the insurance works. It is important to disclose your full health history and not to attempt to cover anything up. Read the terms of the insurance thoroughly and miss nothing out. Used as intended, critical care cover is a valuable financial tool.

Plenty of help is available when choosing your critical illness cover. Log on to the internet and you’ll find on-line brokers who’ll be able to offer advice, a choice of quotes and the best possible terms.

Whatever type of insurance you are taking out, there are some common mistakes that people make which cost them money and may leave them without cover when they most need it. If you are looking at insurance then you should avoid these common mistakes if you want to be fully covered and save yourself money:

Not updating policies

It is important to keep all insurance policies up to date to make sure that you have adequate and accurate cover. If your policy doesn’t allow for inflation then you might need to increase its value every few years. Also, with life insurance remember to keep beneficiaries up to date when any new event such as marriage or birth or death occurs.

Letting insurance lapse

If you have various bank accounts and insurance policies it can be easy to let an insurance policy lapse when changing accounts or closing an account. You need to make sure you keep track of all your policies, because any lapse could mean that you are not covered or that any continuous cover benefits you had are wiped out. For example, if you lapse on medical insurance you will be treated like a new customer and will not be covered for any previous illnesses you have had.

Not shopping around

Too many people take the first insurance policy that they are offered, without looking to see if it is really competitive or what they want. Just because you can afford a policy doesn’t mean it is the best one for you. You should always take your time to look for insurance, and get quotes over the phone or online before arranging meetings and finalising a deal.

Getting inadequate cover

Another common mistake is not getting adequate cover, either for home or life insurance. Although Ј100,000 might seem a lot for cover, if you die then your family has to live off this amount for years and it won’ t be enough. Make sure that you are fully covered for the value of your home and its contents and that your life insurance policy is adequate so that your family can survive.

Lying on the application

Although it might seem tempting to lie on your policy about something, the lender will usually find out and if they do you might be left with no cover. Although you might pay more for your policy by disclosing all medical problems, it is important to be honest on your application.

Using the wrong insurer

Perhaps the biggest mistake you can make is picking the wrong insurer for your policy. Although many insurers are perfectly honest, there are some that will cost you more money and simply won’t pay out when you need them to. If you are unsure about anything in the insurance agreement, do not sign it. Make sure you check over anything you sign and consult a solicitor if necessary.