Why Won’t Your Insurer Pay Your Critical Illness Cover?

Over the last few years, much has been written on critical illness (CI), products. These articles have highlighted both the negatives as well as the positive aspects of this complicated type insurance coverage. Research shows that there is a lack trust in certain claim processes and procedures. Worse, insurers are not willing to pay expensive claims if they can. The fact that claims statistics are not 100% comparable has reinforced this concern.

Customers need to be educated about insurance products and the processes involved in making claims. According to claims statistics, Standard Life did not pay 14% of critical illness claims during the first half 2006. According to its claims statistics, 6 percent of claims were declined due to the claim not meeting policy definitions. 8 percent were declined for non-disclosure. Standard Life paid out PS9.8 millions in 184 CI claims, with an average claim value PS53,546. PS300,000. This was the largest claim that was paid. Standard Life Assurance protection manager stated that the decline rate of claims was disappointing. The Statement of Best Practice of the Association of British Insurers will hopefully reduce declined claims and help to restore trust in an industry that, strangely, doesn’t like to decline claims.

In 2005, almost 25% of critical illness claims were denied by the country’s largest insurer, Norwich Union. In 2005, it rejected 23% of all claims. This was due to policyholders failing to disclose medical conditions or adhere to terms and conditions. Insurer declined 12 percent of claims for non-disclosure medical facts at the time policies were taken out, and another 11% because policy conditions hadn’t been met.

These figures are slightly lower than 2004’s, when 13% of claims were rejected for non-disclosure. The same percentage was rejected because of non-compliance to policy criteria. Norwich Union stated that the group was working to reduce non-disclosure.

The insurer included a “full-disclosure fact sheet” in 2006 to emphasize the importance of filling out application forms correctly, thoroughly and carefully.

Experts say the issue of non-disclosure is a major concern and urge consumers to disclose all medical information and choose the best policy for them. As the Association of British Insurers announced that it was taking additional steps to protect consumers buying income protection, life, critical illness, and income insurance, the claims figures were revealed.

In light of this figure, insurance companies stated that they are currently working on proposals to make it easier for people to apply for these types of insurance via the telephone and the internet. The statistics on critical illness claims over the last few years have shown that 60% of claimants were between 40-59 years old, 32% were between 0 to 39 years, and 8% were over 60.

Top five reasons for claims included cancer, stroke, multiple sclerosis and benign brain tumor. For those who are concerned about their financial security in the event of serious illness, critical illness coverage can be a valuable contract. With the high level of debt in the UK and the inability to save money, critical illness cover could be one of many useful policies.