This part of the site contains information applying for life assurance
What is Life Assurance?
Life assurance can offer protection for you and your family in the event of your death or should you have an accident or illness.
This is the simplest form of life assurance. A term assurance policy is taken out for a set period of time (e.g. 10, 20 or 25 years) and guarantees to pay out a specified sum if you die during that period of time. If you survive the term of the policy, no payment is made. An example of this type of assurance, is mortgage protection assurance.
Whole of Life Assurance
As with the term assurance policy, whole of life assurance is a protection product with promises to pay out an agreed sum on your death. However in this case, there is no time limit on the term of the policy. Once the policy is taken out, the policy can continue uninterrupted for the rest of your life, as long as the premiums continue to be paid.
This policy will be pay out an agreed sum if you contract one of a number of specified serious illnesses. Typical illnesses covered include cancer, strokes, heart attacks, multiple sclerosis and kidney failure.
Income Protection (Disability) Insurance
Also known as Permanent Health Insurance, this protection policy provides and income (typically a percentage of your current earnings), if you are unable to work because of sickness or disability. Policies contain what is known as a 'deferral period' i.e. you must be off work 13, 26 or in some cases 52 weeks before the payments commence. This type of insurance is available as an individual policy or as part of a group scheme provided by an employer.
How does the Application Process Work?
When applying for life assurance, you will be asked on the application form detailed health questions and other questions about your occupation, hazardous hobbies and previous insurance history. In addition, the insurance company may request one or more of the following:
- a report from your GP;
- an independent medical examination;
- other medical tests.
Thus the insurance company obtains a very complete picture of your state of health. Each application is considered individually and the decision on whether to offer cover and on what terms depends on the facts of that particular case.
An insurance company may refer to its Chief Medical Officer (who is a doctor) and it may also obtain other specialist medical advice where necessary to ensure that the medical information is correctly interpreted. Having received any necessary medical evidence and advice the insurer’s final decision will be one of the following:
- to offer cover at the standard premium;
- to offer cover at an increased premium or subject to special conditions;
- to decline to offer cover. Sometimes in such cases the insurance company can indicate that they may be in a position to reconsider the application at some point in the future e.g. if the medical condition in question has stabilised.
The right of insurers to charge some people higher premiums or to decline to offer cover is specifically allowed by the Equal Status Act. This allows people to be treated differently where insurance is concerned if this different treatment is based on reliable actuarial or statistical data or other relevant underwriting or commercial factors.
Am I Obliged to Disclose all Relevant Information?
When you apply for life assurance (which includes serious illness and income protection cover) you are under a legal obligation to disclose all relevant details about your health. If it subsequently transpires that you did not disclose on your application something which was relevant and which you knew about, then the insurance company may cancel the cover under the policy and no claim will be paid.
Relevant details are those which an insurer would regard as likely to influence the assessment and acceptance of an application. Where you are in doubt about whether or not some information is relevant, you should disclose it and allow the life assurance company to decide.
All insurance companies explain on application forms the consequences of failing to disclose relevant details. You should read the application form warnings carefully. The insurance company will rely on what you have told them in your application form and you should not assume that the insurer will automatically clarify or confirm any information you provide.
Your duty to disclose applies right up until the date when the policy comes into force. So you should make sure your insurance company is aware of any changes which happen after you have signed the application form but before the policy is in force.
How are Genetic Tests Treated?
There is one exception to this obligation to disclose all relevant details to an insurer and it is in relation to genetic test results. Under the provisions of Part 4 of the Disability Act 2005, an insurer cannot request, take into account or process the results of genetic tests. This applies to both positive and negative tests. Under the legislation, an insurer may not take into account a negative test result even if you ask the insurer to do so.
However this exception does not change your legal obligation to provide the insurance company with full details of any:
- symptoms experienced,
- non-genetic laboratory tests or investigations,
- treatment, and
- family history
when answering the questions on the application form and providing any other information requested by the insurer.
How are Premiums Calculated?
Life Assurance operates on the principle of the pooling of risks. Policyholders whose state of health is below average and who therefore have a higher than average chance of claiming from the pool pay a higher than average contribution. The process whereby an insurer assesses if cover can be provided and what premium should be payable is called “underwriting”.
Where underwriting and the calculation of premiums are concerned, there is no standard industry practice - different insurers will have different practices. This guide is intended only to give an indication of the general principles involved.
How Can I Query an Underwriting Decision?
If you apply for cover and are turned down, or are offered cover at an increased premium (or subject to special conditions), then you can request that the insurer's Chief Medical Officer write to your doctor to explain the reason for the underwriting decision. (Insurance companies prefer not to deal directly with queries of this nature because they feel that where medical issues are concerned it is more appropriate for the response to be channelled through the individual's GP.)
How is Personal Information Handled?
Insurance companies have procedures in place to ensure that any medical information you provide is kept confidential and take their responsibilities under Data Protection legislation very seriously.
What Happens if my Health Subsequently Changes?
If you are diagnosed with a condition or if your health deteriorates after the policy comes into force, this will have no impact on any existing policies that you may have (as long as you answered all questions fully at the time of applying for the policy and continue to pay the premiums due).
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