Summary
The requirement for precision and candour when writing critical illness policies. This article explains.
Very little is more upsetting in life than to be diagnosed with a serious or chronic sickness. Concerns are made much worse when your insurer informs you that they will not pay out on your critical illness insurance or private health cover for the Cancer or HIV you are afflicited with.
You are told to read sub-clause six of paragraph 324 of the small print, which informs you that you have been diagnosed with the wrong type of cancer. Only the first five days of your treatment will be paid for and only tumours below the knee are covered, then it’s down to you to find the finance.
This situation may sound ridiculous, but even though insurers and brokers are regulated, this type of procedure continues to carry on. It has been a slow process to freshen up the industry and to make certain that clients get a proper deal.
A short time ago Cancer Backup, a well known charity, emphasizes this problem by coordinating a wide ranging mystery shopping surveys, which exposed some alarming facts about the private health insurance industry. It established that of all the leading insurers only BUPA provided cover for cancer patients right through the duration of their illness. Only the first part of the treatment is covered by most of the health insurance companies. Care or treatment over a lengthyperiod of time, such as chemotherapy or hormone replacement is normally excluded.
Although life insurance companies and brokers want to finance long term cover for policyholders with chronic illnesses, they won’t always make it clear to potential customers, at the time of signing up what they are covered for.
Although both Cancer Backup and Macmillan Cancer support have been in talks with like mindedestablishments within the industry to lift the standard of sales practices and make the wording of insurance documents much clearer, progress has been slow since the report was published two years ago.
Private medical insurance and critical illness cover is normally taken out by clients who are quite fit and healthy. Getting cancer is the last thing to cross their mind. That is why it is imperative to point out an insurance policy’s exclusions before they sign.
A testimony of best practice for insurance companies writing and selling medical policies has been updated recently by the ABI, which is a welcome step in the proper direction.
The trade body has now suggested that insurers and providers selling these forms of life insurance should set up typical case studies, which explain the conditions when an insurance policy will or will not be paid. Sadly insurance companies no requirement to adhere to this code, which is optional.
Although the Association of British Insurers initiative is to be welcomed, the best way of amplifying a policy is by asking the salesperson to explain the small print.
Nevertheless, industry terminology is in spite of everything still being used by insurance companies to confuse the consumer. For example it is wrong to grade cancer as an acute or chronic illness, argues Cancer Backup. However insurance companies are insistent that it should go in the acute category. customers are only told about this when their claim is rejected.
Even though the ABI have got their attitude right, the insurance companies can only be made to better their principles by the regulator. Better training of tele marketing staff, who sell a greater part of the insurance policies, is also long overdue
More rigorous sales procedures are essential with jargon being eliminated. In the end it remains the responsibility of the insurance companies to make sure that their clients fully comprehend the small print of their policies before they commit themselves.
