Critical Illness and Non Disclosure of Details

mplep

Hi,

Just seen watchdog tonight which shows that 20% of policies are not paid out, due to items not being disclosed when the policy was taken out. They estimate that about 1 million policies are effectively worthless at this time due to this issue, even though people are still paying into them.

One was for a chap who had testicular cancer, but he did not disclose that he had a test for a kidney disease when he was a youngster, even though the test was negative. As his father has had a kidney disease, they are not paying out. They can pick on anything (even not related to your illness) and refuse payment.

My question is that if you are unsure about what you put on your original application or believe you left something out, what’s the best way to be 100% safe?

louloubelle79

Yeah just seen this and shocked me, those poor people whom are really ill and paid for years on end and get sod all!! Dont seem right to me!

raskazz

Not sure what the best way to handle it after your policy is inforce - but certainly when applying for cover, if you are in any doubt about any fact you feel you may have to disclose then check with the insurer.

Withholding facts is not the way to reduce your premiums - lower premiums will not be much use to you if your policy is invalidated!

dunstonh

louloubelle79 wrote: »

Yeah just seen this and shocked me, those poor people whom are really ill and paid for years on end and get sod all!! Dont seem right to me!

The other side of the coin is that these people didnt disclose information that is important to make an underwriting decision. That is potentially fraud. Premiums reflect claims and when people get paid out fraudulently, everyone elses premiums go up.

Why should those that apply truthfully have to pay for those that dont?

The FOS do look at complaints in areas like this and if the illness is unrelated or its a genuine oversight, they do tend to rule in favour of the consumer. I didnt watch watchdog as it's presentation is awful and you never get a balanced view. So, I do not what was said about the FOS ruling on these cases.

Just seen watchdog tonight which shows that 20% of policies are not paid out,

An example of watchdog not quiet telling the truth. 20% non payout is fairly typical. However, that is for all reasons and not just non disclosure. The figures also vary a lot with providers. One of the companies with the biggest number of claims only rejected 2% of claims due to non-disclosure.

For example:

Scottish Equitable: To end September 2005 90% of claims were paid out, totalling over £22 million. 10% of claims didn’t pay out – 27% due to non-disclosure, with the remainder not meeting policy definitions or having a policy exclusion applied

Norwich Union paid over £65 million to critical illness claimants in 2004, an increase of £15 million more than the amount paid in 2003 (£49 million). A total of 924 claims were paid (74% of all claims received), with the average payment being over £70,000. Norwich Union was unable to meet 167 claims (13%) due to non-disclosure of medical information at policy outset. A further 164 claims (13%) were declined because the critical illness policy conditions were not met.

Skandia: More than £130m paid in critical illness claims. To 1 July 2005 1,323 claims paid. 79% paid, 21% not paid • 11% definition • 8% claim withdrawn by client • 2% non-disclosure

In 2005 Friends Provident paid out over £18m to 322 critical illness claimants. An additional 67 claims were declined for not disclosing significant medical information that was known to the applicant at outset and 38 claims did not meet the conditions of the policy.

thebyp

i would chime in here and second what was said above. disclusure is just that. you are asked a question and expected to answer it. remember, give to much information rather than not enough. if they ask if you have any medical condition say yes, if you have ever had anything. it may hold up your application, but thats better than it not paying out in the future.

mplep

dunstonh wrote: »

The other side of the coin is that these people didnt disclose information that is important to make an underwriting decision. That is potentially fraud. Premiums reflect claims and when people get paid out fraudulently, everyone elses premiums go up.

Why should those that apply truthfully have to pay for those that dont?

Thanks for the detailed info, very interesting stuff.

How best to ensure you don't fall into that category. Some people have a long history of medical issues, going back decades. How can they ensure they EVERYTHING is added to a policy? Can you get your GP to write a report?

Secondly, can you later disclose these items to your insurance provider if you feel you might have not disclosed something relevent?

miniemma

I watched this with interest too as I have recently purchased Critical Illness insurance. Does anybody know, if your policy is found to be invalid, do you get your premiums back?

dunstonh

miniemma wrote: »

I watched this with interest too as I have recently purchased Critical Illness insurance. Does anybody know, if your policy is found to be invalid, do you get your premiums back?

Not if you have committed fraud.

isayoldchap

Can't you just ask the insurance company to examine all the medical records ?
My guess is as this can be expensive for them,including family history,shouldn't we just be allowed to write ,dont know ,or can't remember and leave it to the companies to do the investigations.

What's the % payout for the Scottish Mutual (Provident) please.

Oh no our life cover and mortgage cover is with L&G.

FlameCloud

dunstonh wrote: »

Not if you have committed fraud.

With regards to general household insurance, the FOS's position is that if the policy ends through either cancellation or voidance, then it is the insurers option to refund premium.