Critical Illness Insurance. Still too many claims thrown out.
The latest figures from the insurance companies continue to show large numbers of rejected claims. Whilst the figures do vary between insurers,
On average they work out at around 1 in 5 claims are rejected. (see below).
Critical illness insurance pays out a tax free lump sum if the policyholder is diagnosed with one of a long list of qualifying illnesses and conditions included stipulated on the policy.
The biggest reason for claim rejection is that the insurer has identified that the policyholder failed to fully disclose their medical condition when they originally applied for the insurance. This always results in conflict between the insurer and the policyholder so our best advice is always disclose everything, no matter how small or insignificant you think it may be.
If you do make a claim, your insurer will always search through your past medical records to satisfy itself that you had disclosed everything at the time you made your application. Then if they find that you did omit medical information, they have a valid contractual reason for refusing your claim.
In some people’s eyes this makes critical illness insurance the least reliable form of insurance – but we disagree. We say if you’ve disclosed everything about your medical history, no matter hoe small, then there should be no problem.
Having said that the rejection figures from the insurance companies do vary, so it may be that some are more stringent than others.
Rejection rates published by UK insurers
Insurance Company Percentage of Critical Illness Insurance claims rejected
Insurance Company
Percentage of Critical Illness Insurance claims rejected
Bupa
21.5%
Friends Provident
25%
Legal & General
22%
Norwich Union
26%
Prudential
20%
Scottish Equitable Guardian
10%
Scottish Equitable Project
28%
Scottish Provident
11%
Scottish Widows
18%
Skandia
21%
Standard Life
20%
The other factor that affects the rejection rate is that more recently issued policies tend to have higher claims and higher rates of rejection. So if an insurer has not been in the market for a long time, or it has had a major sales campaign on critical illness insurance during the last few years, then it’s rejection rates will be higher.
Our advice is buy the critical illness policy that suits you best and on your application form, fully disclose everything about your health. Don’t miss anything out. Then you’ll be OK
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