Life insurance is primarily aimed at those who are healthy as a risk aversion policy, however, it’s one of those mortal subjects nobody enjoys discussing.
Putting arrangements in place (and communicating them) for loved ones for when you’re no longer around.
It’s often only after catastrophic news following a diagnosis that the realisation surfaces that you should set up a life insurance policy. When that happens, you quickly find that the financial institutions able to give you peace of mind don’t make it easy for you to get a policy.
There are exclusions in all life insurance policies, so your challenge becomes finding an insurance firm that can tailor the policy to your specific circumstances.
1 – Work with a broker
You will need an insurance broker when you’re applying for life insurance with an existing health condition because without one you’ll spend forever in telephone consultations, repeatedly telling your story and trying to understand the industry jargon. It’s even worse if you happen to call an insurer using a call centre as the staff are essentially sales reps working off a script with little knowledge of what they’re selling, let alone how it can be tailored.
With a broker by your side, they have market knowledge about what providers cater to what circumstances and the ones who will tailor the cover by either working with underwriters or carrying their own internal underwriters to tailor your cover to your specific requirements.
2 – The terms to be aware of
All advisors and available consumer advice you come across will tell you to scrutinise the terms and conditions of your policy cover before agreeing to it. When you have a diagnosed health condition, it’s imperative you do this as there’s a very high likelihood that it’ll be excluded from standard policies, unless you request specific amendments, which is why using a broker is advised. It’s what you’re paying them to do. Work with insurers to get your conditions tailored to suit your circumstances.
Even using a broker though, you’ve still some checking to do on all proposed policies. The specific areas you’re looking for are exclusions to the policy, which are the circumstances explicitly detailed in your policy terms and conditions setting out when the policy will not pay out.
To use a hypothetical example, consider someone who has been diagnosed with breast cancer.
The policy could cover “Ductal Carcinoma In Situ” (DCIS) which would cover the initial diagnosis of breast cancer but only when it’s limited to that specific part of the body. In the exclusions, it could also state that you are not covered for invasive breast cancer. If that were the case, what it means is that in the event of death as a result from the cancer spreading to other parts of the body, the policy would be invalidated.
The beneficial policy would cover “in situ” and “invasive” in the case of cancer. Getting that type of policy can be challenging though as insurers will consider the likelihood of not only current diagnosis but also possible recurrences during the term of the policy.
“Aviva covers mastectomy, partial mastectomy, segmentectomy and lumpectomy for ductal carcinoma in situ, as well as other treatments.”
Let Us Compare The UK’s Specialist Life Insurance Companies – No Obligation Quotation
3 – Restrict the duration of cover with term life insurance
There are two main categories of life insurance, Whole of Life cover, and Term Life Insurance.
When you have a pre-existing health condition, all insurers are going to apply premium loading to your policy plan. This is an added expense to cover the higher risk the insurer is taking.
Despite medical advances for treatment of many conditions, including early screening and improved medical intervention, insurers still linger on the risk aversion side of all known health conditions. That only lasts for a certain period of time though by adding premiums to the price you pay. It can’t go on forever.
Going back to the earlier example of breast cancer, it is possible for the additional premiums to be removed after ten years, sometimes less, other times more. That’s with any insurer and not just specialist firms.
You can request a policy revision at any time. Do note though that you are going to have to request it as there’s next to no insurance company going to send you a letter to notify of reduced premiums.
This is another reason to use Term Life Insurance because that way, you can get cover in place, say for example until your mortgage is fully paid, and following successful treatment, you can then access a wider range of insurers for a more favourable policy price.
The only thing to be aware of if you do later switch your life insurance provider is that you are covered for pre-existing conditions and the recurrences of any.
Some will treat you as a risk because of a historic condition but give you a good quote because they’ll explicitly exclude it from the policy. Sometimes, it can be better the devil you know when you’ve any type of medical history that puts you at a disadvantage with insurance firms.
Shorter term policies can be preferable when cost is a determining factor!
There are specialist insurers that cover extenuating circumstances with term cover, whereas others prefer to wait until your treatment is over. For that reason, it might be to your advantage to pay the higher premiums catering to less policy exclusions in the short term, then revising your policy after you’re been through all treatments as there’s likely to be more insurers willing to provide you cover, which may turn out to be cheaper than a tailored term life insurance plan.