 |
|
|
|
||||
 |
|
||||||
 |
|
 |
|
||||
 |
|
||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
|
|
|
 |
|
||
 |
Platinum Financial Consulting, 14 Mildmay House, Foundry Lane, Burnham-on-Crouch, Essex, CM0 8BL |
 |
|
 |
|
||
|
Frequently Asked Questions |
In this section, we attempt to answer many of the common questions we are continually asked. These questions appear in a list below. Simply click the question you are interested in and you will be taken to the answer. If you feel there are other questions that would be of interest to yourself and other customers, please let us know. |
|
|
Why have I been turned down or had my life insurance application declined? |
Each insurance company will have clear guidelines against which they judge any life insurance applications they receive. Some insurers will have quite strict guidelines, and so they may not consider an application which another insurer will happily take. Other insurers specialise in certain areas and so if you have been turned down by a number of mainstream insurance companies, we may still be able to get you life insurance. We know which is the best insurer to apply to, given your circumstances. |
| [Back to Menu] |
Why am I being charged more than normal for my life insurance? |
| In some cases an insurance company will charge you an extra premium for your life insurance (sometimes called “loading” your premiums). This is because they feel that your medical history, or your job or hobby, makes you a higher risk than normal. Therefore they will charge you extra to reflect that higher risk, or they may decline your application. However not all life insurance companies may assess your case in the same way, and we may be able to find an insurer who is willing to offer you cheaper cover. |
| [Back to Menu] |
Is there any insurer who will offer me life insurance? |
| Some insurance companies have very strict guidelines on what they are willing to accept. Other life insurers may have a different view. There are also a number of specialist insurers who may be able to consider your life insurance application, even if the more recognisably named insurers will not. We find out which insurers will consider your application and how much they are likely to charge. Unfortunately there may be times when it is not possible to get life insurance cover, but we will give you our honest assessment of your case, and whether this may change in the future. |
| [Back to Menu] |
What can I do to find out why I’ve been declined for life insurance? |
| If you are unclear as to why the life insurance company has turned you down, then please talk to us. It may be that we are able to identify the reason from what you tell us of your personal circumstances, medical history, your family’s medical history, and also which insurance company you have applied to.
There are also two other things which you can usefully do to identify the reason why your life insurance application has been declined or postponed, if you believe that the reason is a medical one. Firstly, the insurance company to whom you originally applied will, if requested, send your doctor a letter explaining their “reasons why”. Therefore the first step is to ring the insurer, and ask them to send the Reasons Why letter to your GP. Then book an appointment with your doctor (giving time for the letter to arrive), to discuss what the insurer’s letter says. You can also ask your doctor about what is in your medical history that is causing the insurer concern. Secondly, request a copy of the report that your GP sent to the insurer. Under the Access to Medical Reports Act, you are allowed to see what your GP has written about you. Some surgeries may charge a small fee for this, but if you are at all uncertain about the reasons why your life insurance has been declined or postponed, then a copy of your GP’s report is invaluable. |
| [Back to Menu] |
Why am I classed as a Special Risk for life insurance? |
Special Risk groups for insurance purposes are people who, because of an existing or previous medical condition or because of the higher risk nature of their job or hobby, may not be able to get “standard” life insurance. They are also sometimes referred to as “Non-Standard Risks”. |
| [Back to Menu] |
Am I allowed to see my doctor’s medical report on me, before it is sent to the life insurance company? |
| Yes, you are allowed under the Access to Medical Reports Act 1988 to see a copy of the report that your GP writes about you. However please bear in mind that if you request to see your medical report before it is sent to the insurer, you will need to contact your GP as soon as possible. This is because your doctor will keep the completed report for 21 days, so that you may see it. If you have not seen it within these 21 days, he will then send it on to the insurance company. Therefore you should contact your GP surgery as soon as possible to avoid delaying the process.
You are also able, under the same Act, to see a copy of the report which has already been sent to an insurer. This is particularly useful if you have been turned down by a life insurance company and are not sure why. The report that your GP sends to the life insurance company will contain all the relevant information on your medical history that they have based their underwriting decision on. |
| [Back to Menu] |
Do I have to tell the insurers everything on my life insurance application? |
| With life insurance, it is essential that you tell the insurance company everything that they ask – answering each question carefully, truthfully and completely. If you are not sure whether to mention something, then mention it. It is better to give the insurer more information and detail than they need, than to omit something which may cause them not to pay out on your policy when you die. Let the insurance company decide what is important and relevant. |
| [Back to Menu] |
What is underwriting and how does it work? |
| The underwriting of a life insurance policy is the process by which the life insurance company decides whether you meet their criteria, whether they are prepared to insure you, and if so, how much they are going to charge you. Each life insurance company will have strict criteria against which they will assess you, for example your height to weight ratio. An underwriter will check your medical and personal history against these criteria, and then will decide what premium they are going to charge you. There will be a standard non-smoker and a standard smoker rate, but the insurance company may “rate” your premium, or charge you extra, because of your health or because you may take part in a dangerous hobby or pastime. |
| [Back to Menu] |
Why do smokers get charged more for life insurance than non-smokers? |
| Life insurance companies will class you as a smoker if you have used any tobacco products in the last 12 months. The amount that you are charged for your life insurance is based on how long the insurer thinks you will live, and therefore how likely you are to claim on the policy. There are a number of factors which determine how long you are likely to live, and these include your age, your sex, your medical history and whether you smoke. As smoking can reduce your life expectancy, the insurance company will charge a smoker more than they will someone who doesn’t smoke. |
| [Back to Menu] |
What does Utmost Good Faith mean in life insurance terms? |
| Utmost Good Faith in life insurance means that you are required to be completely honest when applying for life insurance and disclose all relevant personal and medical information, including any previous health problems you have had. Unless you are completely truthful in your life insurance application, there will be a risk that your life insurance company will not pay out when a claim is made against the policy. Don’t risk it – tell them everything. |
| [Back to Menu] |
What is Life Insurance? |
| A life insurance policy is designed to pay out a lump sum upon the death of a person or persons named on the policy. There are many reasons why life insurance is required, the most common being to provide for a loved one, or to ensure the repayment of a long term debt such as a mortgage. Besides offering Life Cover it is also possible to include Critical Illness cover and a number of other benefits on your policy if you so wish.
It makes sense to ensure that you have sufficient life cover to repay your mortgage if you die. This is particularly important if you own the property with a partner or have a family. If you have a young family you should consider the financial impact on the family if one of the parents were to die. In some cases only one partner may be in employment while the other brings up the children, however you should both consider life insurance as there will be significant financial pressure if either of you were to die. If the working partner were to die, the family have lost the benefit of the regular income. If the partner bringing up the children were to die, then the remaining partner may need to give up work, reduce their hours worked, take a different job, or pay for additional support such as childcare. Either way, the loss of a parent will not only have a huge emotional impact, but a major financial one as well. Even if you are single, in some circumstances it would still be a prudent decision to take out insurance. You never know when your circumstances may change and you may find you are uninsurable when you come to apply in the future. The main benefits of term life insurance are as follows :
People will normally select the term of their policy to coincide with major events in their lives. If you are looking for cover to protect your family, then setting the term until the children are 18 or 21, is a logical decision. Equally many older couples will select a term to expire at retirement age. This way they have the peace of mind of knowing that they have provided for their partner. Even if you are a single person when you buy your first property, it makes sense to protect your mortgage from the outset. As we have pointed out, there could come a time in your life where the insurance providers consider you uninsurable due to poor health or accident. Imagine how you would feel if you had a young family and found you could not insure yourself, even though you could have when you first bought the property. Obviously cost is important, and so you will probably only want to insure yourself for the amount you will owe to your mortgage lender during the period of the loan. Also the type of mortgage could have an impact on the premium. If you are concerned about any risk associated with decreasing term insurance then, if you can afford the premiums, you could be better off opting for a level term policy. Any surplus cash would of course go to your family if you died during the policy term. |
| [Back to Menu] |
What is Decreasing Term Insurance? |
| Most people who have a repayment mortgage choose to have decreasing term insurance. This is commonly called Mortgage Protection, however it should not be confused with Mortgage Payment Protection which will pay your mortgage payments for typically 12 months.
The idea behind decreasing term insurance is that the amount that would be paid out reduces over time, in the same way as your mortgage debt reduces. This would not be appropriate cover for somebody who has an interest only mortgage, as the mortgage debt does not decrease. An interest only mortgage should be protected by a level term insurance policy. These policies will pay out the same amount whenever the policy holder dies within the policy term. As the benefit reduces over time, a decreasing term life insurance policy is the cheapest option to protect repayment mortgages. At a very simple level, they work in the following way :
Decreasing term is also used to provide another type of life insurance known as Family Income Benefit. This type of policy will pay your family an annual income during the term of the policy. However each year that you live, the total amount the insurer would have to pay out reduces. For example if you insured yourself to provide £10,000 per year for 10 years, then if you died after 3 years the maximum paid out would be £70,000 (£10,000 for the remaining 7 years). However if you were to die after 5 years then the maximum paid out would be £50,000 (5 remaining years x £10,000). This makes Family Income Benefit a very cheap and attractive option of providing for your family. A decreasing term policy is used to insure the following events :
There are many other uses as well. The monthly premium can either be guaranteed or reviewable. If you choose a guaranteed policy, then the monthly premium amount you initially pay will be the same for the entire life of the policy (unless you choose to increase the policy with inflation). Choosing a reviewable policy means that after a certain period (typically 5 or 10 years) the life insurance company will review the policy to see if they can still offer the cover at the same price. At this point they may alter the monthly premium. The policy will be reviewed on a regular basis. Reviewable policies are typically cheaper at the start of the policy than guaranteed policies. It is important to note that if you do not answer any question on the insurer's application form truthfully, you could run the risk on invalidating any claim you may make. |
| [Back to Menu] |
What is Level Term Insurance? |
| Level term insurance means that the benefit that will be paid out by your life insurance policy will remain constant (or level) throughout the term. If you insured yourself for £100,000 for a term of 10 years then, if you die at any point during the term, the full £100,000 would be paid. This is therefore an ideal policy to repay an interest only mortgage.
As the amount owed on an interest only mortgage does not decrease over the term of the mortgage, you will require a policy that will pay out the full mortgage debt whether you die in the first year of holding the policy, the last year, or anywhere else in between. The policy expires at the end of the term. No claims can be made after this point. The premiums are not refunded if a claim is not made, and there is no surrender value. If you choose a guaranteed policy, then the monthly premium amount you initially pay will be the same for the entire life of the policy (unless you choose to increase the policy with inflation). Choosing a reviewable policy means that after a certain period (typically 5 or 10 years) the insurance company will review the policy to see if they can still offer the cover at the same price. At this point they may alter the monthly premium. The policy will be reviewed on a regular basis. Reviewable policies are typically cheaper at the start of the policy than guaranteed policies. It is important to note that if you do not answer any question on the insurer's application form truthfully, you could run the risk on invalidating any claim you may make. |
| [Back to Menu] |
How long can a life insurance policy term last? |
| The term of a life insurance policy could be anything from 1 year up to about 40 years. The maximum term offered by the insurer may reduce depending upon the age of the insured person. Most providers tend not to offer a term beyond the age of 85. If you choose a term of between one and five years, you may lose some benefits. The obvious example would be a life insurance policy where terminal illness benefit may be withdrawn. Terminal illness benefit would normally pay on the diagnosis of a terminal illness. However, the policy would still pay out on the death of the person insured. |
| [Back to Menu] |
When will a life insurance policy pay out? |
| The life insurance policy will pay out if the insurable event occurs during the term of the policy. This means that if you bought a life insurance policy to cover you for 20 years and you died after 10 years, then the policy would pay out. The policy will normally cease at this point, once a claim has been made. This is typically the case even if you have several events insured in one policy, for example a husband and wife insuring each other against death or critical illness. It is possible however to buy a policy that would continue to offer insurance even if a claim against it has already been made. We are able to provide all types of policy; please talk to us if you are in any way uncertain. |
| [Back to Menu] |
How much will a life insurance policy pay out? |
| A decreasing term policy gets its name from the fact that the sum assured gradually reduces over the term of the policy. Whilst at first you may wonder why anybody would want such a policy, if you consider that if you are using the policy to protect a debt like a repayment mortgage, you will realise that the amount you owe your mortgage lender will also reduce over the years. This therefore makes these policies suited to any situation where the actual amount you require to be paid out will reduce over time.
When a decreasing policy is used to protect a mortgage or other liability, the policy has a built-in interest rate associated with it. These interest rates are typically 7% - 10%, but it is possible to get providers to quote using different interest rates. The sum assured therefore reduces based on an assumption that you are paying an interest rate of 10% on your mortgage. As long as interest rates do not go above 10%, then in the event of a claim there should be at least enough money to repay your mortgage. It should be noted that if interest rates went above 10% for a considerable period of time, then in the event of a claim you may not receive all the money you need to repay your mortgage. If you buy a level term policy then the full sum assured will pay out should you die during the policy term. |
| [Back to Menu] |
Are there any events when a life insurance policy would not pay out? |
Life insurance policies are relatively straightforward contracts. Therefore most of the things that could stop the policy paying out are in the hands of the applicant.
Suicide may not be covered by some life insurance companies. |
| [Back to Menu] |
How much will a life insurance policy cost? |
| Most insurance quotes are given based on standard rates. This means that the premium quoted will be based upon obvious factors such as your sex, age, occupation and whether you smoke or not. Because the quote is not based upon any medical underwriting, it cannot be guaranteed until the insurance company issue you with acceptance terms. On application, the insurance company will fully assess your application including any medical reports or tests as necessary. Once the policy has been underwritten, the insurance company will issue formal terms to you, including the monthly premium. Whether the premium remains the same during the term of the policy will depend on whether you have selected a guaranteed or reviewable policy. A guaranteed premium is exactly what you would expect, namely the premium will be the same throughout the life of the policy. A reviewable policy will start out with an initial premium (normally cheaper than the guaranteed premium), but after a certain period the insurance company will review the policy. At this point they could adjust the premium you are required to pay. If you want to protect the policy against the impacts of inflation, or have other reasons to gradually increase the value of the policy, you could choose to “index” the policy. This means that each year the benefit will increase in line with a known index, such as the Retail Price Index (RPI) or an agreed percentage. With an indexed policy both the benefit and the premium will increase year on year. There will be other charges for administration and running of the policy. These are included in the monthly premium. You will be able to see details of these charges in the illustration we provide to you. The insurance company will also pay us a commission for introducing the business and providing you with help and information. We are keen to stress that this does not make it more expensive for you to deal with us, in fact as recognised independent financial advisers some insurance providers give us preferential rates. |
| [Back to Menu] |
Are there any other benefits I can add to my life insurance policy? |
| Most life insurance policies will allow you to add several benefits to your policy. Obvious examples are Critical Illness insurance and terminal illness benefit. There is however one additional benefit offered by some providers that may be of interest to you, which is Waiver of Premium. This benefit will continue to pay the premiums on the policy should you be in a position where you are unable to work due to accident or sickness for a defined period (typically 6 months). The premiums will continue to be paid for you until you recover, or the policy term lapses, or you reach a specified age, typically 60. |
| [Back to Menu] |
Can I increase the amount of benefit I receive from a life insurance policy? |
The sum assured is set and underwritten at the outset of the life insurance policy. If you decide that you simply want to increase the level of cover for personal reasons, it may be difficult to do so using your existing policy without further underwriting. Typical events are :
|
| [Back to Menu] |
Can you get Life Insurance for overweight people? |
| The majority of standard insurance companies may not consider offering life insurance if your BMI or Body Mass Index is above a certain level. Each insurer will have a maximum BMI that they will consider. In the UK, people with a BMI between 25 and 30 are categorised as overweight, and those with an index above 30 are categorised as obese. People with a BMI of 40 or more are described as morbidly obese. We are usually able to obtain Life Insurance for overweight people with a Body Mass Index of up to 55, sometimes higher. We specialise in finding life insurance, critical illness cover, income protection insurance and travel insurance for overweight people. Just give us a call and we can help. |
| [Back to Menu] |
What is the aim of a critical illness insurance policy? |
| Critical illness policies exist to help you when you have an illness that is going to have a major impact upon your life. All the major illnesses that could have a serious detrimental impact on your lifestyle are covered. Obvious examples are heart attacks, strokes and cancer. They therefore provide a one off cash lump sum for you to use as you see fit. Many people recognise that should they suffer a critical illness they may not be able to work again, in such circumstances they could also lose their home if they have not repaid their mortgage. Most people will therefore set the level of critical illness benefit to at least match the amount they owe on their mortgage. However some conditions are not covered, even though being diagnosed with the condition may be traumatic. The most obvious examples are some forms of cancer. Fortunately, due to medical advances, some cancers are now treatable and therefore these cancers will be excluded on most providers' policies. It is important to stress that the more serious cancers are still included. Whilst there may be a few variations between providers on the conditions covered, most reputable insurers create their lists in line with those illnesses considered critical by the medical profession and The Association of British Insurers. |
| [Back to Menu] |
When can I make a claim on a critical illness insurance policy? |
| If you are diagnosed with a critical illness, then a claim should be made. Some insurers will pay out immediately; others may require you to survive for a period after the onset of the first symptoms. This is typically for a period of 30 days. Many insurers will also include terminal illness benefit in the policy. This will pay the sum assured if you are diagnosed with a terminal illness with a life expectancy of less than 12 months (irrespective of whether it is on the critical illness list or not). |
| [Back to Menu] |
What critical conditions are normally covered on a critical illness insurance policy? |
Please remember that this is a typical list of conditions covered on most critical illness insurance policies, but it is not definitive. If you are keen to make sure a specified condition is covered, then please make us aware.
|
| [Back to Menu] |
How do life insurance companies assess Permanent Total Disability? |
| Your critical illness insurance policy will include a series of activities or functions that determine whether you are classed as disabled. Normally if you are unable to perform three of these functions without assistance you will be classed as disabled and the policy will pay out. Please also see the Own or Any Occupation section. These tests are know as “functions of daily living” - however insurers will test them differently.
Another insurer uses the following:
|
| [Back to Menu] |
What does Own Occupation or Any Occupation mean in my life insurance policy? |
| Some critical illness and life insurance policies require you to state if the policy is to be on an Own or Any Occupation basis. This Own or Any criteria puts an additional layer of assessment into determining Permanent Total Disability. Disability benefit may or may not be payable depending on whether you selected a policy that had an “Own” or “Any” occupation definition. If your policy has an Own Occupation definition, then it will pay out if, in the opinion of the insurer, you are unable to continue your own occupation and this will continue to be permanent. A policy that has an Any Occupation definition will only pay out if, in the opinion of the insurer, the person insured is unable to pursue any occupation and will be permanently unable to do so. To use an example, it may be that a taxi driver is no longer able to drive following an accident, but despite their disability they could be employed in a different job. If the policy was set up on an Own Occupation definition, then the policy will pay out, but it would not pay out if it was on an Any Occupation definition. Nevertheless, even if the policy was on an Any Occupation definition, if the policyholder fails the "functions of daily living" tests mentioned in the previous section, the policy should still pay out. |
| [Back to Menu] |
Are there any instances when my critical illness insurance policy would not pay out? |
| You run the risk of your critical illness insurance policy not paying out if: You don’t maintain the premiums You were found to be untruthful, either at the time of application or claim Your condition is not covered in the policy Most insurers will not pay a claim from a cause that arises whilst you are living abroad for more than 12 months Most policies contain a clause that says it will not pay if your claim results from: drug abuse or self-harm, HIV/AIDS (unless named groups, blood transfusion or assault), war and civil commotion. |
| [Back to Menu] |
