Intermediaries have hit out at providers who are increasingly cutting premiums and then applying exclusions, loadings and additional conditions to reduce their risk.
IFA Dennis Hall is critical of Legal & General, in particular, as he says his firm has not had a single case in recent months with L&G which has not been modified after the initial application is made.
He states: “I believe that L&G are cutting the price to the bone and then rating and excluding far more aggressively than ever before. In each case we put through to L&G, there has been no indication at the proposal stage our clients have anything seriously wrong with them.”
One of Hall’s clients was recently refused waiver because his medical report revealed he had complained about a sore neck from sitting at his PC for too long, even though no treatment was required.
As the client is aged under 40, does not take time off work and appears fit and healthy, Hall cannot understand L&G’s position.
He adds: “On critical illness, the list of exclusions relating to anything connected to spine, vertebrae, nerves etcetera was mind-boggling. It is blanket exclusion that seeks to exclude risk rather than insure against it.”
He believes L&G should broadcast the fact they only want the cleanest of cases and allow applicants to choose to go to another provider if they have had even minor illnesses.
Kevin Carr, senior technical adviser at Lifesearch, says he has had similar experiences with providers who only want very clean cases.
He states: “Not only have we had similar experiences, we’ve been saying this for the last two years. The cheaper the price, the harsher the underwriting is likely to be.”
As a general rule, says Carr, companies which are a little more expensive at quote stage will be more favourable when consumers claim, but he adds some providers are "good with some conditions and harsh with others".
He has found companies such as Friends Provident, Bright Grey and Bupa to be “helpful”.
Without a specific policy number, L&G declined to comment on Hall’s example case.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Staying invested could prove lucrative
Consider lasting powers of attorney
Less environment, more governance threatens to undermine firms' green credentials
Evidence your compliance