Standard Life has published statistics behind its critical illness and life assurance claims experiences which reveal non-disclosed alcohol abuse problems could make life insurance policies invalid.
While cancer accounted for of over half of claims between 16 November 2003 and 15 November 2004, findings suggest females under the age of 40 were more likely to make a claim on their critical illness policy, while men tended to aged between 41 and 60 and received more in the payouts.
After cancer, the majority of claims in the event of death were as a result of heart disease, suicide and respiratory disease, and the average payout was found to be £48,200.
Additional figures also reveal, however, Standard Life declined 20% of CI claims because they either were not considered a claimable condition under the policy definitions or because there was non-disclosure of information at the application stage.
Over recent years, critical illness providers have seen huge advances in medical technology affect the definitions under which claims could be considered, and SL’s statistics show 57% of declined CI cases were because policy conditions were not met.
One example presented by the life assurer reveals a CI claim was rejected because the individual suffering cancer of the bladder had failed to disclose part of their bladder had been previously removed but had not been declared prior to the application.
Similarly, another claim for a CI payout after an accident was turned down because total permanent disability was excluded from her cover and paralysis could not be considered so, particularly as several treatment options were open to her.
Two additional life cover case studies related to excessive drinking and liver disease were also rejected, says Standard Life, as the applicants had either failed to disclose their excessive drinking before taking out the policy or had stated they drank “only a modest number of units of alcohol a week”.
In both cases, the sum assured was not paid to the estate but premiums were refunded because had the insurer known the full medical disclosure prior to underwriting, they would either have rejected the applications or substantially increased premiums.IFAonline
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