Serious Illness Life Insurance
What are the common things that are not covered under serious illness insurance?
For a valid serious illness claim, the insured must develop the serious illness as defined in the policy conditions. But beware because typical policy descriptions like heart attack does not mean it covers angina. Transient ischemic attacks (TIAs) are not strokes. Non invasive cancer is not cancer. A vast number of serious illness sufferers actually die from their disease and typically most policies stipulate that you must survive for 14 days after diagnosis of the illness for it to be considered a valid claim.
- The extreme severity of some of the illness covered by the policy definition would make a claim almost impossible.
- In some cases it is highly unlikely that a person may be able to claim. Some conditions are hereditary. For example, a person may not be able to obtain insurance against a specific medical condition in the knowledge that he/she was predisposed to develop that condition without showing that information to the insurer.
- Some of the conditions covered have such a low likelihood of a claim occurring given the low incidence of that condition in the population in general. (see attached file on epidemiology)
Would you have any advice for someone choosing serious illness insurance so that they get the right policy - for example, when would optional supplementary cover be a good idea and so on?
- Intending customers should concentrate on the core illnesses definitions (all companies cover them) – these are the diseases that make a clear impact on our lifestyle and where most claims have been paid so far.
- We should have a realistic expectation of exactly what is covered but more importantly we should be aware of what is not.
- We should consider the true validity of products which offer impressively long lists of illnesses that they cover.
- We should concentrate on value for money (get as much as we can as cheaply as we can).
- Consider this, many ordinary life policies (e.g. term assurance) have a terminal illness benefit, whereby the life office will make an upfront payment of a portion of the sum assured should a person be diagnosed as suffering from an illness that is terminal (i.e. one in which death is likely within say 12 months). This certainly eases the burden for those wishing to put their affairs in order.
- Stand Alone Serious Illness Cover - as the name suggests, this provides a lump sum payment on the diagnosis and certification of a prescribed serious illness as defined in the contract. The lump sum will be paid provided you survive for 14 days after the serious illness event.
- Accelerated Serious Illness Cover - in the event of death or serious illness (whichever occurs first), the sum assured will be paid out.
- Optional benefits such as Surgical Cash and Hospitalisation Cover may help to make like for like comparisons difficult for the consumer and their value for money is debatable. Personally I wouldn’t recommend them.