Life Insurance Critical Illness Cover

Why Insurers Deny Claims on Life Insurance Critical Illness Cover Policies

Over the past few years, there have been numerous complaints against insurers not providing payouts for people’s life insurance critical illness cover. In the last couple of years, for instance, only 20% of critical illness claims were paid. Insurers often blame the applicants for two things; firstly, their lack of understanding of the fine print, particularly the terms and exclusions, and secondly, due to their non-disclosure of important health information.

Reason 1: Critical illness on claim is not covered

The first reason insurers deny most critical illness claims is clients are often misled into believing that any type of illness is covered. According to many insurance companies, this is largely due to not reading the small of print in the life insurance critical illness cover policy. The Association of British Insurers (ABI) recently published a set of definitions for 20 critical illnesses, and registered insurance companies that provide critical illness cover policies must comply with the ABI definitions.

These are; heart attack, stroke, cancer, organ transplant, coronary artery by-pass, kidney failure, blindness, deafness, loss of limbs, multiple sclerosis, aorta graft surgery, coma, brain tumor, paralysis, parkinson’s disease, terminal illness, loss of speech, heart valve replacement, and third degree burns.

This clearly illustrates that insurers may only provide payouts to claims that are attached to the aforementioned illnesses. Otherwise, insurers would have no choice but to deny the claim.

Reason 2: Non-disclosure of important medical information

Time and time again, consumers are strongly urged to disclose their full medical history and health related information, as well as select the most appropriate policy for their circumstances, and yet insurers say that many still do not do so. This is very crucial because insurance companies do not cover pre-existing conditions. For instance, if you fail to disclose such information and later on be diagnosed with the same illness, your claim will be flat out denied. As a result, you will waste a lot of money as a life insurance critical illness cover policy is rather expensive.

In 2006, many insurance companies started using a full disclosure fact sheet in their data-gathering tools to drive home the importance of answering the medical history honestly and correctly. Fortunately, signs of improvements are starting to come out.

Educate and inform

The ABI said it is currently taking active steps to protect the consumers when buying life insurance cover, as well as fix the process of assessing claims. This should hold true because the industry as a whole needs to educate consumers not just about the cover policies, but also about the correct procedure of making a claim on these policies. GP