Summary
In this article we explain how Financial Protection Insurance may grow to be more popular with the insurance industry finally making constructive steps that could with a bit of luck be successful.
A lot of experienced and qualified financial advisors would be of the same opinion that Financial Protection Insurance is necessary to the majority of families, either as a safeguard in the event of premature death, prolonged illness, loss of employment (especially in the present economic climate), or cover for an accident.
Life Insurance is the foundation of all financial assurance for cover for a mortgage or to ensure a lump sum that is not taxable, in the eventuality of death. Sadly, a proportion of other Financial Protection Insurance types, do not do not have similar reliable qualities and have been branded as being miss-sold. Also, based on what we know, critical illness cover has suffered owing to startling omissions from insurance policies making it feasible for insurers to reject many claims, as genuine as they may be.
In spite of this, some faith was reinstated when Aviva gave details on the conclusion of claims on Critical Illness Insurance policies on their half yearly statistics.
Critical Illness Insurance claims were being rejected because clients did not disclose their full medical background. As a result Norwich Union says that in the last five months the amount of declined claims has reduced considerably from 6.8 per cent in the last year, to 1.5%.
Why? We think, not only Legal and General but all of the life insurance companies, because of destructive public relations, have been placed in a position whereby they must diminish the number of claims that are rejected. Does this show how forceful the media can be? Debateable perhaps – you may think we are cynical but we believe there are other issues that encouraged the insurers to make modifications. Lately, as a result of dire media, sales of Critical Illness Insurance policies have declined which in turn has clearly impinged on the insurance company’s profit. This was probably the catalyst that promoted the change!
Scottish Provident, Friends Provident, Axa and Norwich Union have instigated some important changes purposely designed to decrease their rejection rates. To start with, they silhouette clearly that all health disclosure, however insignificant a visit to a Doctor might have been, must be includedmade known. Scottish Provident, among others will get a Doctor or Nurse to telephone every candidate to discuss all the details of their medical record. If the policy then goes on risk, some policyholders are being informed that it is essential that they provide complete health disclosure and they are allowed to add or put right any details on their application.
The insurer may then re-evaluate the risk and if it is believed to be increased the monthly payments will likely be increased – which seems more reasonable and eventually more appropriate than paying the original premium then having a claim rejected due to non-disclosure of medical records.
This action should have been put into operation by the Insurance Companies years ago as the public’s understanding of Protection Insurance has eroded by their somewhat strange approach. Without doubt, there is a clear and necessary need for protection insurance so we can hope that it is able to re-build trust and then the popularity it rightfully merits.
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