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Critical illness Insurers under fire

Critical illness insurance again came under fire in recent

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press. The basic problem is that a critical illness claim is not as clear cut as, say, life insurance or car insurance. With car insurance it's clear whether or not you have an accident - the damage is there to be inspected and repaired and with life insurance the insurer can't easily argue that you're not dead!

With critical illness insurance, before it will pay out the insurer will want to satisfy itself that the claim is valid in three primary areas:

Has the diagnosis been made correctly?
Is the illness/condition included in the schedule of illnesses/conditions listed on the policy?
Did the claimant correctly disclose their state of health and health history on their original application form?

It's in everyone's interests to ensure that the diagnosis has been made correctly - so there's rarely any conflict between insurance company and policyholder on that matter. It's the other two validation areas where conflict can arise.

Depending upon the wording on the policy's schedule of insured illnesses there can sometimes be some illnesses which fall into a grey area - it can be argued that they are insured and it can be argued that they aren't. Now it's not an issue if the insurer believes an illness is covered but the policyholder doesn't - the claim is never made and the issue never surfaces! But the sparks fly when the policyholder thinks he is insured but the insurer disagrees. Such a case comes before the Courts in the next few weeks. David Hawkins from Staffordshire is suing Scottish Provident under his £400,000 policy. Basically, the policyholder's medical advisers believe his illness is covered by the terms of the policy whereas the insurer's medical advisers disagree. If Mr Hawkins wins, the press will have a field day and the critical illness industry will suffer a further knock it can ill afford.

Another writ, filed in the High Court, points up the problems when an insurer thinks that the claimant mislead them on the original application form thereby obtaining insurance cover on false pretences. Thomas Welch form Kensal Green, north London, is suing Scottish Provident for £206,800. The issue goes back to 2000 when, two years after taking up the critical illness policy, it was confirmed that he had testicular cancer. Scottish Provident refused the claim because of "non-disclosure", saying that Mr Welch had not been honest about his smoking habit. He admits that he did smoke earlier in his life but insists that he had long since quit by the time he applied for the insurance and as such, did complete the form honestly. We presume that the case in court will centre upon whether Mr Welch accurately answered the questions about smoking. Most insurers define "a smoker" as someone who has smoked or taken nicotine products within the last 5 years. If Mr Thomas had said "yes", to this type of question, then his insurance premium would have been as much as 65% more than he would have been charged as a non-smoker. We guess that his lawyers may try to argue that he omitted information by simple error and that the past smoking was irrelevant to his testicular cancer. An interesting issue. We shall follow the case and report the outcome.

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Did you Know?
The European Health Insurance Card (available through UK Post Offices) allows UK citizens to receive medical treatment in other EEC member state for free or at a reduced cost, if medical treatment becomes necessary during their visit or if they have a pre-existing condition which necessitates medical care (such as kidney dialysis).

The scheme's intention is to enable people to continue their stay in an EEC country without having to return home for medical care. As such, it does not apply to people who have visited a country for the purpose of obtaining medical care. Nor does it cover medical care that can be delayed until the visitor returns to the UK.

Furthermore, the European Health Insurance Card only covers healthcare which is normally covered by a statutory health care system in the country visited, so conventional travel insurance is still necessary.

Did you Know?
Cheap secured loans are widely advertised on the Internet but of those applicants who are accepted, 43% are offered a higher rate than the rate they saw advertised (source: Experian). That's why, if you're looking for a cheap secured loan, it's a good idea to apply through a loan Broker. The Broker will know exactly who will accept your credit history and find you the cheapest rates of interest.

Did you Know?
As you already know, personal loans are widely advertised on the Internet. But how can you be sure to find the cheapest interest rate? Research from the UK's largest credit reference agency, Experian, shows that of accepted loan applications, 43% are offered a higher rate than the advertised interest rate. So, if you're looking for a cheap personal loan, it's probably best to apply through a Loan Broker. The Broker will be well aware of which lenders will be happy with your credit history and they'll be well placed to find you the cheapest interest rate possible.