Insurance World

Ladies, if your mother or any other female blood-line relatives have a history of breast or ovarian cancer then from next year onwards, you could face higher insurance premiums. You could even be refused cover altogether.

When these women apply for life and critical illness cover, the insurance industry wants to ask them whether they have been tested for the gene mutations BRCA1 or BRCA2. These are the gene complications that increase the chances of them developing these cancers. But before the insurance companies can ask these questions on their application forms, they must get approval from the Genetics and Insurance Committee, the body that advises the Government on these and similar issues.

In the coming months the Association of British Insurers (ABI) will be requesting the Committee for authority to ask women whether they have been tested positive for BRCA1 or BRCA2 gene mutations. These are the mutations that are present in 1 in 10 of newly diagnosed cases of ovarian cancer and 1 in 20 of new cases of breast cancer. Approximately 1 in 850 women in Britain inherit a faulty BRCA1 gene and of those, 14 – 18% will develop breast cancer during in their lives.

On the web site for the Genetics and Insurance Committee we found a notice saying, ” The Committee expects that the Association of British Insurers will submit in late 2006/2007 four revised and updated applications for the use of adverse results from the predictive genetic tests of the BRCA1 and BRCA2 genes (breast/ovarian cancer) in helping to determine insurance premiums for life and critical illness insurance”.

So far, application forms issued by British insurance companies are only allowed to ask for the results of predictive tests for Huntington’s disease. Even then, the question can only be asked when the application is for more than Ј500,000 of life insurance cover or mote than Ј300,000 for critical illness insurance or over Ј30,000 for payment protection insurance. This rule is set under an agreement entered into by the insurance industry which is due to expire in 2011 but the Chairman of the ABI’s Genetics Working Party, Harpal Karlcut, is reported in the trade insurance magazine “Cover”, as saying: -

“We are looking to get approval for the breast cancer test by the end of the year”, adding, “The two breast cancers are the next conditions that we will look at but after that we don’t see the need to look at other conditions. We do keep an eye out for what diseases may come up in the future but there is nothing else on the horizon”. We add another important rider – yet!

There’s a new critical illness policy on the market which attempts to go some way with regard to sorting out the perplexity regarding exactly what is, and is not, covered when it comes to claiming on the policy.

Traditional critical illness policies tend to cover up to 35 listed medical conditions. Policyholders could become seriously ill with a condition that doesn’t fall into the scope of the policy and find that their illness is not covered, whilst others may be diagnosed with a listed illness with a lower “grading” which is relatively easily treated, for which they get a full payout.
Because of this inequality, the Financial Services Authority is uneasy with regard to insurers failing to fully understand that cover is restricted to certain specific illnesses.

This new product is marketed by the Prudential, under the name of the Flexible Protection Plan, and is unusual in that it claims to cover an amazing 140 medical conditions. However, cover is based on the severity of the condition which could possibly cause some uncertainty regarding the grading of these illnesses.

This is how the plan works:

Listed in the policy are practically all serious illnesses and the payout when one these is diagnosed will be graded according to the severity of the condition. The Prudential says that by tying payments to the degree of seriousness of the illness means that more payments can be offered to people with debilitating illnesses, who may otherwise get nothing at all. An example of this is that should you lose the sight of one eye; the Prudential policy will pay 25% of the sum assured. Normally, critical illness policies would only pay out when total blindness occurs. In all, 140 severe conditions are covered.

A spokesman for one of the specialist financial advisers welcomed the range of the policy, but voiced some concern regarding the implementation of these severity-based payments, saying that it would be open to argument as to what level of severity some illnesses would be graded as. It was felt that it would not be advisable to enter into this type of policy unless you had a very clear understanding of exactly how it would work. We quote “It will be up to the consumer to decide whether a guarantee of getting a smaller payment is better than possibly getting nothing.”

The cost of this new policy is approximately twice as much as conventional critical illness cover.

If your main concern regarding insurance cover should you become critically ill would be the financial outcome, it might be better to consider life insurance. Particularly, if you have a family to support, you may need something that is going to guarantee their lifestyle in the worst case scenario and with the addition of some income protection cover, which would meet outgoings in the event of you becoming unable to work due to illness. This type of cover, unlike the critical illness policy, protects you against common conditions, which result in you being unable to carry out your work.

The best course of action would be to contact a broker and check out the alternatives. The internet’s a good place to start and there are some good internet discount’s available, along with plenty of advice. A good broker will be able to compare the products available and come up with the right insurance product for you.