For CI, the insurer with the longest list of conditions covered may not necessarily be the best. It depends on the definitions around how much would be paid and when. And, of course, the price.
Likewise, joint cover may not always be the best solution for couples – there are dozen or more reasons why single cover is often better for all protection products, especially CI.
Always check the exclusions – but also check the added value services. Policy A may come with built in access to a virtual GP service, for example, which could be the tipping point against Policy B.
Most protection is still written on guaranteed rates, which means the premium stays the same for the length of the policy (which could be 20/30 years or until retirement) but reviewable premiums also exist, which will be a little less expensive, but could rise in future.
The main area to consider on IP is the occupation class, which is the definition of how ill you need to be before you can claim. ‘Own’ and ‘suited’ are typically preferable as the policy should pay out if you can not do your own job, as opposed to being unable to perform a list of ‘work tasks’ or activities of living.
Claims
The biggest myth around CI and IP is that claims are not paid. Insurers publish their stats yearly and most are typically above 90 per cent to 95 per cent with the main reasons for declined claims being non-disclosure (you did not tell us something important) and not meeting the definition (you are not ill enough to claim/your illness is not covered).
For claims to be declined for non-disclosure it needs to be something ‘material’, that is, something important that would have impacted the policy, such as a loaded premium or exclusion – not ‘I stubbed my toe on the stairs’.
Based on data from Mr Lakey, 92.8 per cent of all CIC claims are paid with only around 2.6 per cent declined due to non-disclosure, which he describes as a “massive turnaround from 15 years ago”.
He adds: “IP claims are also impressive, particularly among the friendly societies and explaining to a client why claims are declined can only assist.”
Age, health and Covid-19
According to Mr Knowles most IP policies will cover the virus: “Most IP policies will pay out for Covid-19 if your client has symptoms (just be careful of some providers who have added exclusions for new policies), but it’s important to know that they are only covered if they have medical condition and can’t work because of it; it does not cover government lockdowns, self-isolation or redundancy.”
The cost of protection varies on a number of factors. The older you are the more it will cost, so buying when young is not a bad idea, especially if you know you may need it later in life. Smoking roughly doubles the premium and any potentially dangerous hobbies, such as scuba diving, rock climbing, flying planes etc will be of interest depending how frequent it is and to what level.
