Critical Illness Insurance – The Non-Disclosure Problem


You don’t want insensitive handling or non-cooperation from your insurer if you find yourself in the unfortunate situation of needing to file a claim for critical illness insurance. According to many newspaper articles, this is exactly what’s happening. The problem is that the insurer will want to do extensive research about your medical history before they pay you. Although you will have given them similar information when you first applied for the coverage, the insurers will insist that they verify all of it. Your doctor will verify that you are not a smoker.

These are the obvious reasons. They are faced with a large claim, usually over PS100,00. They want to make sure that they have all the facts about you. Now that you have claimed, they will go through your medical records and verify that you gave them all the information you requested. Each detail, even the smallest, will be scrutinized. Their reams and reams upon a correspondence can be very upsetting.

Insurers defend their processes by stating that they want to make sure that you fully disclosed all information about your health when you accepted the business. They want to make sure you did not cheat the company by withholding certain information to get a policy issued when it might not be possible. Non-disclosure, as they call it is, is cheating. They can refuse to pay your claim. It doesn’t matter if the information that you omitted had nothing to do the claim. According to the insurers, every piece of information that you provide was used in calculating your premium. Any omission will affect the calculation.

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Insurers are especially cautious if the claim is made within the first five years of the policy. Any claim that arises during this period will be considered an “early case” and insurers will be especially vigilant for policyholders who have taken out critical illness insurance, even if they suspect that they are already sick.

All this scrutiny can lead to a lot of negative press. You don’t want your insurer asking you a lot of questions or making you feel stressed if you are very sick.

This is undoubtedly a conflict. Insurance companies must work harder to soften the inquiry process and communicate more effectively with claimants if they want to counter negative press. Insurance companies must be more compassionate during a difficult time for claimants.

This negative PR has had two consequences on the market for critical illness insurance. Some applicants have been favoring the insurers with lower rejection rates, while others have stopped applying.

Avoiding insurers with high refusal rates is not a good idea. Because published figures may be misleading, this is why it’s important to avoid insurers with high refusal rates. According to the latest figures, Scottish Equitable Protect has declined to pay 28% of critical illnesses claims. Friends Provident is close behind at 25%. These figures are comparable to Scottish Provident’s 13.7%. Many policyholders may be forgiven for favoring Scottish Provident. However, this is not always the best decision.

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Interpreting these figures can be difficult because the data may be affected by the length of time the insurer has been in the critical market. Companies that have been in the market for only a few years will have the highest rejection rates. This is because policies that are less than a year old are more likely to be rejected. Companies such as Guardian Financial Services have a rejection rate just 10%. It is true that Guardian Financial Services has been in business for more than 15 years and has a well-established book of businesses.

It’s unfortunate that this negative publicity has eroded trust in critical illness insurance. We believe that this insurance is important in protecting family finances, but people are being discouraged from purchasing it. If the primary income source becomes seriously ill, then the family’s income could plummet. This means that these policies’ tax-free lump sums can be a key to the family’s financial survival.