Critical Illness (mortgage) thread

cazalee

Hi, appreciate any advice about critical illness policies. About 10 years ago husband and I took out first mortgage through a broker who also sold us a critical illness policy with Prudential. About 5 years later we moved, took out a bigger mortgage, and applied for a new critical illness policy with a different provider. That application was refused due to pre existing medical condition. Question for us is, was the original Prudential policy ever valid?

We recently asked Prudential for a copy of our original application form and it shows that we did not complete any medical history, through a 'fast track' application process (we were under a certain age at time of application). Due to 2nd failed application we stuck with the Prudential and are still paying the policy, but now plan to cancel as the criteria under which it would actually pay out are so narrow we no longer feel it worth the premium (now around #50 per month).

Was the Prudential policy ever valid in the first place / would it have ever paid out? Incidentally, I also went part time a few years back, and wondering whether that holds any relevance to Critical illness cover...

dunstonh

Hi, appreciate any advice about critical illness policies.

Fair enough. However, why title your thread Mortgage PPI if you want to talk about a different subject? If you can edit the thread title I suggest you do so. Otherwise it is currently misleading and you may miss people reading the thread due to wrong subject (i.e. those thinking your thread is about MPPI rather than CI)

About 10 years ago husband and I took out first mortgage through a broker who also sold us a critical illness policy with Prudential. About 5 years later we moved, took out a bigger mortgage, and applied for a new critical illness policy with a different provider. That application was refused due to pre existing medical condition. Question for us is, was the original Prudential policy ever valid?

If you declared it on the application then yes (or if it occured after the application), the original provider would have taken that into account in their underwriting process. CI plans are underwritten at point of sale based on the medical questions they ask. This differs from PPI which is underwritten at point of claim.

We recently asked Prudential for a copy of our original application form and it shows that we did not complete any medical history, through a 'fast track' application process (we were under a certain age at time of application). Due to 2nd failed application we stuck with the Prudential and are still paying the policy, but now plan to cancel as the criteria under which it would actually pay out are so narrow we no longer feel it worth the premium (now around #50 per month).

If the policy covers you for critical illnesses and you are no longer able to obtain cover due to a medical condition then is it wise to cancel it?

Did the medical condition happen after application or before? If before, have Pru said it would void the policy had they known about beforehand?

Incidentally, I also went part time a few years back, and wondering whether that holds any relevance to Critical illness cover...

None whatsoever. CI applications, like life assurance, are a snapshot at the point of application. What happens after the policy is in force doesnt matter.

cazalee

dunstonh wrote: »

Fair enough. However, why title your thread Mortgage PPI if you want to talk about a different subject?

OK - thanks. Not familiar with the jargon.


If you declared it on the application then yes (or if it occured after the application), the original provider would have taken that into account in their underwriting process. CI plans are underwritten at point of sale based on the medical questions they ask. This differs from PPI which is underwritten at point of claim.

It is a long-standing condition which was diagnosed long before the original application. We didn't declare because we weren't asked to.

If the policy covers you for critical illnesses and you are no longer able to obtain cover due to a medical condition then is it wise to cancel it?

This is really why we have stuck with it so long - but, having read the policy in the cold light of day, the definition of a 'critical illness' is so narrow that the premium is starting to look disproportionate to the risks. This is particularly the case as our mortgage term (and the amount owed) starts to decrease.

Did the medical condition happen after application or before? If before, have Pru said it would void the policy had they known about beforehand?

Before. We haven't asked Pru that question, and after our experience with the refusal, I know husband has been reluctant to do so, in case that in itself created problems with the existing policy. But given we are thinking of cancelling, it seems logical.

I think there are two issues for us; 1) the medical history means we are more conscious of health issues (but the condition itself is not included in the cover provided by Pru...); 2) all the bad press about PPI etc etc - this has made us speptical whether Pru might use the existing medical history to reject ANY future claim. Apparently there is some increased risk of certain cancers for example, because of the medical history.

magpiecottage

It is a bit of a grey area. With mortgages, insurers do tend to skimp on the underwriting sometimes.

If they indicated that you should tell them anything they might reasonably wish to know then they may be able to void the policy in the event of a claim.

However, if they did not I think such action would be difficult. In that case I would hang on to your copy of the application just in case.

cazalee

Thanks Magpiecottage, appreciate that. I think we will go ahead and cancel - #50 per month is very expensive for a 'grey area', even though I'm pretty sure there isn't anything to say we needed to declare.

marshallka

cazalee wrote: »

Thanks Magpiecottage, appreciate that. I think we will go ahead and cancel - #50 per month is very expensive for a 'grey area', even though I'm pretty sure there isn't anything to say we needed to declare.

So was the advisor "supposed" to ask you the question about pre existing conditions then? Don't know the "rules" but maybe they should have asked you this question and they did not?

dunstonh

Critical illness policies ask the full insurance underwriting questions. They are not like PPI. Think of them a bit like life assurance applications but with about 10 more questions.

For reference, I deal with far more CI claims than I do life assurance claims. My youngest claimant was 26 (breast cancer) and most recent claimant was 31 (stroke). Like all insurance, you never know when you willl need it. If you never need it you may view it as money wasted. However, you will have your health instead. If you do need it then it will be the best thing you ever purchased.

CI policies cost more than life assurance because they pay out more than life assurance.

magpiecottage

marshallka wrote: »

So was the advisor "supposed" to ask you the question about pre existing conditions then? Don't know the "rules" but maybe they should have asked you this question and they did not?

Look at what the OP said:

cazalee wrote: »

We recently asked Prudential for a copy of our original application form and it shows that we did not complete any medical history, through a 'fast track' application process

In other words Prudential (or possibly Scottish Amicable) decided they did not want to know and took a chance. That was a commercial decision by the insurer at the time - they have to live with it.

marshallka

Just for some idea on some cases at FOS about Critical Illness and disclosure details

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/13/jan-critical-illness.htm

dunstonh

marshallka wrote: »

Just for some idea on some cases at FOS about Critical Illness and disclosure details

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/13/jan-critical-illness.htm

Note the 2002 date. Long before the non-disclosure guidelines written by the FOS were published and are now followed by the insurers (or if not, they dont have a leg to stand on)

Claims stats now show providers paying out in over 90% of claims. In 2002, that probably would have been around 65%.

marshallka

dunstonh wrote: »

Note the 2002 date. Long before the non-disclosure guidelines written by the FOS were published and are now followed by the insurers (or if not, they dont have a leg to stand on)

Claims stats now show providers paying out in over 90% of claims. In 2002, that probably would have been around 65%.

This is slightly more current but I was posting for the case studies really.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/48/insurance-non-disclosure.htm
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/61/61-insurance.htm