The whole truth - or no payout
When insurers refuse to pay a Critical Illness claim it’s usually because the policyholder didn’t ‘disclose’ important relevant facts. For some insurers, one in ten claims are rejected on the grounds of ‘non-disclosure’. And though the number of declined claims is falling, it still accounts for a higher proportion of CI than life insurance claims.
With CI, the failure to disclose facts the insurer considers relevant is often unintentional. When you’re asked an open-ended question like ’Have you ever suffered from back or spinal pain?’, will you necessarily remember that six years ago your GP sent you for two sessions with an osteopath after you mildly cricked your back? If the problem has never recurred, perhaps not.
Amibiguous or unclearly worded questions used to be a serious problem with insurance application forms, but the Financial Ombudsman Service, which arbitrates disputes between insurers and policyholders, has helped to eliminate them. This is because when FOS gets a dispute referred to it, it asks how a reasonable person would respond to the question. This tends to blow away insurers if the question contains jargon or convoluted wording. The result is that questions have got simpler, though there are also more of them.
The FOS gives policyholders the benefit of the doubt on what it calls inadvertent non-disclosure – you forgot about a minor piece of information or didn’t think it was relevant. But if you are careless or deliberately give false information, that gives the insurer valid grounds for refusing a claim. Like the man who claimed to be 6 feet tall and weigh 15 stone when in fact he was 5 feet 9 inches tall and weighed 21 stone. Had the insurers known that he was clinically obese, they wouldn’t have offered him a policy, so they were entitled to refuse the claim.
What people often don’t realize is that when a claim is made the insurer has the right to consult your medical records – so anything that’s on your NHS file will come to light. Particularly with CI, it’s important to think hard before answering questions and ensure you have disclosed all relevant facts.
