Critical illness insurance – making a claim isn’t as straightforward as you might think

Critical illness insurance is there to help people when they are in dire need, having been diagnosed with a serious illness. It should be straightforward to make a claim and receive the insurance payout you're expecting, however, the insurance companies are making it quite hard for people to receive their money. When making a claim, people are finding themselves faced with uncooperative attitudes from insurers, and continuous correspondence checking up on further details. At this difficult and distressing time, that is the last thing that the claimant needs.Insurers will not pay out unless they are absolutely 100 sure that the claimant has not made any omissions on the application form. On application, you provide all your medical details to give the insurer a full picture of your health so they can calculate the right premium for you. On making a claim, the insurer will recheck all that information and verify with your doctor to ensure that you did not omit anything.It is only natural that the insurance company is reticent about paying out, as critical illness claims are usually considerably more than £100,000. Therefore, they check every aspect of your medical records and history to ensure that there are no discrepancies between the application form and the facts. This obviously causes delays, which can cause a distressing situation for the claimant.The insurers have defended their practices and say that they need to check out the details to ensure that they are not being cheated on claims. The term ‘non-disclosure’ describes the omission of information on an insurance application form. If you are found to have omitted any medical information, even if the information is not relevant to the eventual claim, your client will be invalidated and you will not receive a payout.If you make a claim within five years of first starting the policy, you will be treated with a large amount of distrust because the insurance company will suspect that you knew you were ill. They call this an ‘early claim.’The insurers’ practices have not gone unnoticed, and the newspapers have recently been talking about the problems caused by their practices. One way for the insurers to lessen the publicity would be to deal with the situation in a more friendly and personable manner. The official letters and demands are not a very good way of dealing with a sensitive situation.As a result of the publicity, some people are choosing not to take out critical illness insurance for the time being, whereas others are applying for companies that have the lowest rejection rates. The companies that have published higher rejection rates are not receiving the same level of applicants.We don't advise you to take the rejection rate figures too seriously, because the figures do not show the whole picture. For example, Scottish equitable Protect are published as paying out for 72 of claims, and Friends Provident pay out for 75. Scottish Provident pays out on 86.3 of claims. So obviously applicants will favour Scottish Provident, but we do advise against this interpretation of the figures. This is because the figures reflect the whole period that the insurer has been in the critical illness insurance market. The shorter the time the company has been running for, the higher figures are likely to be. Guardian Financial Services, for example, have a very low rejection rate of 10, but because they have been operating for over 15 years, the figures have absorbed the years that have been lower and those that have been higher.Critical illness insurance is an essential insurance, especially for families that have one main breadwinner. If the main income earner falls seriously ill and is unable to work permanently, the family could find themselves unable to cope financially and unable to pay the mortgage. So it is important that people are not put off getting critical illness insurance because of the publicity. Be aware, however, that different policies have different rules, and the more basic policies cover fewer illnesses than the comprehensive plans. They usually cover:Alzheimer’s disease Aorta graft surgery Aplastic anaemia Bacterial Meningitis Benign brain tumour Blindness Cancer Cardiomyopathy Chronic lung disease Coma Coronary artery by-pass surgery Creutzfeldt-Jakob disease Deafness Dementia Heart attack Heart valve replacement or repair HIV or AIDs from an assault, blood transfusion, occupational duties or accident Keyhole heart surgery Kidney failure Loss of independent existence Loss of limbs Loss of speech Major organ transplant Motor Neurone disease Multiple Sclerosis Paralysis/Paraplegia Parkinson’s disease Progressive Supranulcear Palsy Stroke Third degree burns Total and Permanent Disability Cover for childrenCritical illness insurance requires individual advice given by a professional, therefore we highly recommend seeking out an independent insurance adviser before making a decision. You can also find out a lot of information on the Internet, simply by typing ‘critical illness insurance’ into your search engine.

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