Last year a survey of 5000 policyholders was carried out by a leading
According to the results, over 1 in 14 of those surveyed had provided false information about their health and lifestyle when applying for life insurance. Some failed to declare how heavily they drank and others failed to declare past medical problems.
In most cases these oversights were adjudged to be unintentional, rather than an attempt to defraud.
One of the
And other insurers could soon follow suit, in an attempt to cut the number of rejected claims due to inaccurate medical information. One in 100 life insurance claims and one in five critical illness payouts are rejected on this basis. Nondisclosure during the life insurance quote application can be used to turn down a payment even when the details are irrelevant to the claim.
Policyholders who disclose something that may affect their risk of ill-health could see their premiums rise, or even cancelled in the worst cases.
Last summer, the Law Commission proposed reforms that would make it harder for insurers to try and avoid paying out on claims, even when the information disclosed by the policyholder was honest.
The commissions’ highly critical interim branded nondisclosure of information on a life insurance quote and the onus on disclosing little medical details during this as unfair to policyholders.
With a final report due soon, insurers are rushing to amend practices ahead of the commissions’ findings.
Some have already taken steps by offering partial payouts if the policyholder had accidentally failed to mention something on their application, even if the claim was not related. Others have introduced methods to help guide customers through the application process.
Thursday, January 31, 2008
Life Insurance - Little Details, Big Difference
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