Insurance - Indexation and Treatment

metallica123

Hi all,

My first post on the forum and hoping to get some guidance

I am currently speaking to few brokers regarding life insurance and/or critical insurance cover for myself and my spouse. I have obtained quotes.

I am currently 35 and have mild hypertension that is controlled on medication.

1. I have been offered index linked policies. What is the view ? Are they preferred or should I opt for non indexation option?

2. I have been offered Relevant Life Cover as I am director of a ltd company.
Does anyone know if it is easy to switch into a personal cover at the same level and premium and without underwriting if I close my company in future? Is it easy?

3. Currently I am under a consultant for my hypertension, however this was at my own request to GP and all tests done have been negative.
Will me being under a consultant affect the premium and is it advisable to take insurance once I have been discharged?

Thank you

Chris_Pollard

Mettalica, it seems like you are seeing the right people for advice. If the cover is only for a mortgage or other fixed liability, then indexation is quite unusual whereas if this is a policy for personal/family protection, then it could make sense to ensure that the financial sums move in line with inflation. With regard to Relevant Life, yes, you can take over this product should you wish to - and as long as you stay with the same insurer (and all premiums paid etc), there will be no re-underwriting.

With regard to your hypertension, one factor that will count against you is your age as you are quite young to have this condition (sorry). If you are still be closely monitored, then perhaps you have only recently been diagnosed but great news all other investigations are normal. If the diagnosis was only recently made, some underwriters might want to see your blood pressure (BP) stabilised and responding consistently to the medication. At worst, they will invite you to re-apply in a few months. However, earlier you say it's mild and well controlled.

If your BP is normal (with treatment), then I suspect you will be offered normal premiums life assurance, however, you might find your premiums for Critical Illness (CI) are subject to a medical rating - perhaps between 25% and 50% of the premium you've been quoted. The other factors the underwriters will take into consideration are your height/weight ratio (Body Mass Index), your family history (parents/siblings only and generally only up to age 60/65), and lifestyle risks such as smoking and alcohol intake. If all the above are normal - then it will only be our BP that is of some concern.

CI pays out on diagnosis of certain serious illnesses, heart attacks, stroke, etc rather than life assurance that pays out on death. For this reason, the underwriter is more sensitive to medical conditions that they would be for life insurance.

The financial advisers you are speaking to seem to be doing a pretty good job, and I'm sure they can help with any hiccoughs along the way - if not, pop back, but I hope this gives you some good insights that help.

metallica123

Chris, Thank you for your quick response.

Yes, RLP seems relevant to me but the insurance broker is not HMRC and I am being told that should I close my company and move to a personal plan I need to repay the relief I had on corporation tax. Do you or anyone know if thats true?

Regarding indexation, a quick search on this forum and google is bringing up some horrror stories and hence my question.

I am non smoker, slim and light drinker so I dont expect those to be issues for life insurance. I have not researched CI as much as Life insurance as I am going step my step - When I was quoted for Life Insurance I was told no medical evidence is necessary. However I have not yet proceeded to application/ questionnaire when all medical queries will come through.

It is here that my query is - since I am under a consultant, should I delay getting insurance till I am discharged back to the GP
This means I am not currently receiving specialist care
OR
Will me being under a consultant not affect the premiums.


Regarding the hypertension, I know that I am fairly young and was actually diagnosed 3 years back. I have been taking medication since then and that is controlling it so far. I had requested GP to refer to a consultant as it had been few years and to check if everything's normal.

Chris_Pollard

It is here that my query is - since I am under a consultant, should I delay getting insurance till I am discharged back to the GP
This means I am not currently receiving specialist care
OR
Will me being under a consultant not affect the premiums.

Hi, I can't help with the HMRC question - that's an area way outside of my "expertise". There are some really helpful qualified financial advisers who help customers on this site - hopefully they can help.

The above questions - no, I don't think you should delay securing insurance yourself. If the insurance underwriters think they need more information regarding present consultations, they will let you know.

Being under the review of a consultant will not, in itself, impact the terms you will be offered. If you're simply having a specialist review and everything comes back ok, then all the better.

In terms of the process when you get to the application form (or your adviser does on your behalf), the insurer might get a medical report from your GP, or they may rely on the information you give them. If you are seeking a significant amount of cover, they have routinely ask for medical evidence regardless of any personal medical history.

If they require a report from your GP, you will be asked to provide consent for this and the insurer will pay any fees for the report itself.

Hope this helps, but one question back. You are taking sensible steps with regard to life and serious/critical illness insurance, but as a Director of your own firm, have you considered, or been prompted to consider Income Protection? How might your income be impacted if you were ill and unable to work? The statistical likelihood of this happening whilst you are of working age is far greater than death, and of suffering a critical illness.

I would urge you to give this serious consideration. Like you, I'm effectively self employed, and if I can't work, my firm's income stops and obviously mine does too. I don't particularly want any savings to pay for all the things I need (including my life and CI insurance premiums) plus my savings wouldn't last for that long so I leave that to the insurance company and they will pay me if I'm too ill to work.

Weighty1

As far as I'm aware if you closed your ltd company and switched a RLP into a personal plan you do not repay the corporation tax relief obtained, but simply doesn't continue to have any tax advantages once the change has been made.

It's worth noting, only Aviva offer RLP with critical illness and many providers have advised that they do not believe RLP's are eligible to include CI cover on the basis that the conditions covered wouldn't necessarily lead to early retirement. As far as I'm aware this hasn't yet been challenged by HMRC and until it is and there is a precedent it's difficult to say whether you can rightly claim tax relief or not.

Personally, I'd say a combination of life insurance (as an RLP) and long term income protection (as a personal plan) could quite easily be a better combination of cover than a life or earlier CI plan.

Provided the hypertension is fairly mild and well controlled on 1 medication I think it's likely to be ok, however, this is always dependent on what the GP writes in a report.

metallica123

Chris_Pollard wrote: »

Being under the review of a consultant will not, in itself, impact the terms you will be offered. If you're simply having a specialist review and everything comes back ok, then all the better.

Understood, thanks. Its just that I read posts here that suggested insurer asking for postponement if there is a review or specialist treatment. I believe if that happens I can try with another provider at a latter date.

Does anyone know if medical information is shared between different insurance providers?

Chris_Pollard wrote: »

You are taking sensible steps with regard to life and serious/critical illness insurance, but as a Director of your own firm, have you considered, or been prompted to consider Income Protection?.

Thank you and not really. The broker has been upselling me regarding this and I am going to do some reading on it to see if that or CI is more relevant to my circumstances. At the moment i am a one man director and there is a possibility that I may go into salaried employment few years down the line.

metallica123

Weighty1 wrote: »

As far as I'm aware if you closed your ltd company and switched a RLP into a personal plan you do not repay the corporation tax relief obtained, but simply doesn't continue to have any tax advantages once the change has been made.

Happy to know that and is in line with what the broker told me. My accoutant told me something completely different. if you are a tax expert, do you have any official link that confirms it?

Weighty1 wrote: »

It's worth noting, only Aviva offer RLP with critical illness and many providers have advised that they do not believe RLP's are eligible to include CI cover on the basis that the conditions covered wouldn't necessarily lead to early retirement. As far as I'm aware this hasn't yet been challenged by HMRC and until it is and there is a precedent it's difficult to say whether you can rightly claim tax relief or not.

Personally, I'd say a combination of life insurance (as an RLP) and long term income protection (as a personal plan) could quite easily be a better combination of cover than a life or earlier CI plan.

Provided the hypertension is fairly mild and well controlled on 1 medication I think it's likely to be ok, however, this is always dependent on what the GP writes in a report.

From my research CI is not a business expense. Interesting view there over a income protection over CI policy. That statement regarding hypertension provides relief.

Chris_Pollard

Does anyone know if medical information is shared between different insurance providers?

No, they don't share information that either you, or your GP provide to an insurer. This is covered under Data Protection. However, if for example, you chose three different insurers for your IP, CIC and Life and each insurer required you to attend for a medical examination or a screening, rather than have three separate appointments, the insurers would share the one screening. This is sensible and would usually be done with your knowledge.

You've used the term "upselling" with regard to IP. It is the most expensive insurance, and for a very good reason. In my opinion it should be the first thing discussed when protecting yourself via insurance, but often it isn't. Perhaps because of price, and it's easier to start the discussion with the cheapest form of insurance. If I needed a new suit, shoes and belt, I'd be quite surprised if the first item the "salesman" wanted to sell me was a belt.

metallica123

Thanks Chris, you have been very helpful.

Yes and this is because I called to get information and quotes for Life and when that was done, I was being sold IP.

Coming back to my original question, I am more inclined to take a plan with indexation. The broker has been telling me that I can even take it off on the first anniversary if I wish but if I dont choose now I cant add it in future.

Weighty1

metallica123 wrote: »

Happy to know that and is in line with what the broker told me. My accoutant told me something completely different. if you are a tax expert, do you have any official link that confirms it?



From my research CI is not a business expense. Interesting view there over a income protection over CI policy. That statement regarding hypertension provides relief.

I'm not a tax expert, I'm an insurance broker. That said, most accountants aren't tax "experts" either.

In regards to your comments on CI not being a business expense, that's the area of contention. Aviva's own QC has stated that their Relevant Life Policy with Critical Illness Cover complies with all the legislation and qualifying criteria for it to be a RLP and therefore it should gain tax relief. Other providers disagree and until it's tested and/or challenged by HMRC nobody has any idea as to who is right or wrong.

Income protection should ALWAYS be a priority purchase above CI cover. Without your income how do you survive? What gives you a broader range of protection IP or CI - definitely IP. That said, if you have a heart attack and are only off work for 3-months yet have £200,000 paid out it's a pretty good outcome. Conversely, if you were diagnosed with Parkinsons and never worked again how much income would you lose? I wish I could see into the future!

metallica123

Thanks Weighty1

I have dropped the idea of CI through my company for future risk issues.

Interesting points and thoughts about IP to think over.