Chronic illness and protection plans, (life insurance)

Chronic illness and protection plans, (life insurance)

There is a lot of fuss in the press about buying protection insurance from the Internet as it is much “cheaper” than using a regulated adviser. Unfortunately, there is not much coverage about the downsides, like “computer says no” or not selecting the correct additional features.

If you go to any comparison website or get phoned by someone offering “direct” life cover, they will be quoting on the basis of a “standard life”, so for the age based rate to be valid, you have to be currently healthy, have averagely healthy parents and siblings and not be diagnosed with any of a huge number of chronic illnesses.

If you don’t fit the criteria for any reason, either the terms will be altered, or the premium will go up, (usually known as “loading”), or if the underwriter is sufficiently concerned, they will not offer cover. For someone in this position a comparison website is a waste of time, as most insurers will take the safe way out and decline cover. Some providers offer plans that are underwritten only on a claim, reducing cover if the premium did not match the risk. If you were high risk and only paid a minimum premium, you might find yourself effectively uninsured! If you have non-standard circumstances, then you really need an IFA.

I have asthma, one of the usual scary chronic illnesses for underwriters, so instead of an income protection plan, I have a slightly loaded life and critical illness plan with a disability income add-on; this was the best fit to my needs I could get for the money I was willing to spend.

For this IFA practise, we have a lot of clients with some form of diabetes, (including one of the partners), so we would consider we have something of an edge compared to other advisers. Each company has a slightly different attitude to any given risk and we will often talk to underwriters in advance of any application to gauge how they will respond to a less than entirely healthy subject.

Some providers will provide written guidance of how decisions will be made, so for your information, this is how one provider will view an applicant with diabetes:-

Potential Underwriting Decisions

Policy Type                 Good Control          Less than optimal Control     Poor Control

                                    No complications    or minor negative                    complications or

                                    or adverse features    features                               multiple negative


Life Cover                   Light Rating             Moderate Rating                    Heavy Rating to                                                                                                                                                                                                                                                                        Decline

Critical Illness           Decline                     Decline                                   Decline

Income Protection     Moderate Rating     Heavy Rating                           Decline

Waiver of Premium     Moderate Rating     Heavy Rating                          Decline

The table is only an approximate guide, as the guidance explains, a number of other factors are also considered:-

  1. Age at diagnosis, (older the better)

  2. Smoker status, (never is better than given up; given up is better than smoker; light smoker is a little better than heavy smoker!)

  3. Blood pressure, (normal is good, anything else is trouble!)

  4. BMI, (weight and height is often an indicator of other troubles to come)

  5. Level of Control (HbA1c/blood sugar: treatment compliance), better control is better!

  6. Any other complications, (issues with eyes and kidneys are common)

  7. Any other relevant medical history, with angina, heart attack and stroke being an almost automatic decline.

  8. Family history of heart disease.

Each of the big providers will view each set of circumstances differently, but even if they all decline to offer cover there is still hope with specialist underwriters although the premiums will be horrifying.

A client of mine with BMI issues, (under-tall or over-short for his weight!), and a recent minor heart attack was offered £200,000 cover for 10 years at £610 per month. The underwriters essentially anticipated he had a 1 in 3 chance of dying within 10 years!

Remember that non-disclosure is not an option; you have to tell the underwriters of all relevant facts or they can, at their choice, refuse to pay out. Never lie on a protection application, if you don’t know, say so or ask, so the underwriters cannot hold it against you. Yes, insurance companies do sometimes refuse to pay out on claims, this is almost always due to non-disclosure; even appealing to the Ombudsman is likely to be pointless if you concealed a material fact.

If you would like to know more about how we can help you plan and realise your financial goals then contact us at or call us on 01223 792 196.

The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.