Pumping Marvellous

Types of protection insurance

When it comes to insurance, finding the right insurer and product for you can be tricky. There are a lot to choose from!

There can also be some confusion as insurance is kind of broken down into two main groups, both of which have different rules about how they work. You have general insurance which is things like your home, car, mobile, travel and private medical insurance. You then have protection that offers life insurance, critical illness cover and income protection. This article is going to focus on the protection insurance side of things.

First things first, let’s do a quick breakdown of the main types of protection insurance that you might want to consider.

• Life Insurance
  Life insurance is a policy taken out that will pay a lump sum of money to your loved ones, in the event of your death, or diagnosis of a terminal illness.
• Critical illness cover
  Critical illness cover pays out a lump sum of money if you are diagnosed with a specific medical condition. These policies usually cover at least 50 claimable conditions.
• Income protection
  Income protection pays you a regular monthly income if you’re unable to work due to ill health.

There are a number of reasons why someone may need life insurance. You generally need life insurance if there is someone that is going to struggle financially if you are not around.

This can include:
A partner who relies on your income to pay a mortgage and/or pay the bills.
Anyone that might inherit your debts (this is partners or children).
Children that are dependent upon you.
Adults that you support e.g. care home fees.

These are the usual things that people think about when they are looking for insurance.

There are also some other big areas to consider too:
Who is going to pay your bills if you are unable to work due to your health?
Would you need to change your lifestyle, downsize your house, stop doing the things you love, if you become dependent upon state benefits?

All of these questions come into play when we look at different protection insurances.

Usually you would arrange life insurance if you have a mortgage or any other debts that your loved ones could be left to repay. Some people also choose to put life insurance in place that will replace some of their yearly income to the household, so that they know their loved ones can maintain their standard of living if they die.

There are also other options like critical illness cover or income protection, this offers a slightly different view on the insurance. With these you are insuring yourself, so that if you are not well, you personally receive some money. The benefits go straight to you, not someone else. It’s all about putting safety nets in place, so that if you are ill and cannot work, you have financial support to hand, so you can focus on your health and face whatever changes are happening.

Personal and Group Insurance Options Video

It’s not very helpful, but the answer is that it all depends on your individual circumstances and needs. Different insurances do different things and everyone’s needs are different. Here are some options that people tend to go for:

Life Insurance and Critical Illness Cover – to match things like your mortgage and any other debts.
Life Insurance – to provide 3 to 5 times your annual income to the household, until your children are dependent, or until your retirement age.
Income Protection – often covering you for between 50-65% of your gross income until your retirement age.

These are just examples, there are many ways and reasons for arranging these policies, they should be designed for you specifically.

You can go directly to an insurer, use price comparison websites or use a financial adviser.

Route to Insurance Video

There are two routes when using a financial adviser, which are ‘non-advised’ or ‘advised’. Non-advised is where you may speak to a person, detailing the things you want and that person can then show you your options. They cannot tell you what insurances you need, or give any advice on how much cover you take out.

With an advised route you again speak with someone about your circumstances, but they will give you advice on what insurances you need and come up with the best, tailored options for you.

Different ways work well for different people, so it is completely up to you which way you choose to go. Ultimately, it’s best to choose an option that you feel the most comfortable with.

As well as routes to take out insurance, there are also different options with the insurance itself as you can choose from different types of insurance and policies. One choice that you have is choosing between ‘medically underwritten’ or ‘non-underwritten’.
Underwritten vs Non-Underwritten Policies Video

With many of the mainstream insurers, they will underwrite your application, asking about your own medical history and family medical history. They will ask about what condition you have, when you were diagnosed, what your treatment or medications are, amongst other things. They will want to know how much your heart condition affects your ability to do day to day tasks, or work.

With a medically underwritten route, the insurer will often ask to see a report from your GP (only with your explicit consent), just to ensure they have all the details they need on your health to make an informed decision.

The other option is to go down a non-medically underwritten route. This can be good for people who do not want to discuss their health. But please be careful as they can come with a number of exclusions, that can exclude claims for any existing health conditions. There are times that these policies can be perfect, but it is a good idea to speak with a specialist on these policies, who can really explain what you are buying.

Another way to access a certain amount of non-medically underwritten insurance is through what is known as ‘group cover’. This is something that employers can arrange to insure their team and the beauty of it, is that there is a good amount of cover that does not need medical underwriting. A Limited company can often access group life insurance and income protection from as few as two people, and critical illness cover from a team as little as three people. Group critical illness cover can be available without medical underwriting, but it will still exclude claims for pre-existing conditions.

Personal and Group Insurance Options Video

(here again as it relates to Group Insurance mentioned above)

If you are unsure of who to speak to, to help you get the insurances you need, please try accessing the British Insurance Brokers Association Find a Broker service: https://insurance.biba.org.uk/find-insurance

When you have decided which route you’re going to take, you will then start applying for cover. If you’re doing this through an insurance adviser, then they will often take over all the administration side of things, to save you the hassle. When you have a heart condition, it is a really good idea to speak with an adviser who does research as to which insurer is going to be right for you, before you apply.

When insurance applications are assessed by an insurer they do a number of things. They either accept the application at standard rates, non-standard rates, postpone or decline. When someone is living with a heart condition, it is likely that many insurers will offer you non-standard rates for cover. For life insurance this is probably a premium increase, critical illness cover and income protection, can potentially be a premium increase and/or exclusion.

A premium increase or exclusion is never great to hear. Life insurance is generally very cheap and increases to the premium, even though we want to avoid them, don’t often make it silly expensive. For other insurances it is quite a good idea to try and focus on the things that you will still be covered for. Yes, you might have a heart related exclusion, but you are still covered for many conditions.

Thorough research is key. It’s best for you to know at the start, what the final offer from the insurer might be, rather than finding out later on that the price you first see, is not the price you are going to get.

When you apply for insurance an application form will be completed, this will be done by yourself or with the help of an adviser if you have chosen that route. There will be many questions, starting off with basic details about yourself such as your name, date of birth and address, then on to your medical history and briefly your family history. An insurer will also often ask about your occupation, any travel that you do and if you take part in any high risk hobbies.

Once the application has been completed it is likely that the insurer will ask a couple more questions or request a report from your GP (with your permission) just to clarify some of your answers on the application, in order to make a final decision. It is also possible that the insurer might ask you to take part in a nurse’s screen, which is kind of like a mini health MOT (and you don’t usually have to pay for it).

If a report has been requested from your GP surgery, this can often take 4-13 weeks to be completed by your GP and returned (we had one take 1 year recently!). This can be very frustrating, as it does feel like it is taking a long time, but there is a fine balance between prompting the GP to complete the form and also being respectful of how busy they are.

When it comes to the terms on offer for the insurances, it’s not easy to say what the result may be, as each person has their own individual circumstances that can feed into the end decision. It can be disheartening if you’re unable to get the cover you had your mind set on, so it’s very important to have realistic expectations.

When we say this it means that if you apply for life insurance, it’s a good idea to expect that there is going to be a premium increase. For critical illness cover and income protection, it’s a good idea to be prepared that there will be some form of a heart related exclusion on the policy, and possibly a premium increase too. It’s also a good idea to be aware that not every insurer will be able to offer you insurance, but please do not give up hope if you have been told no, there are many insurers out there.

If you already have protection insurance and are looking for something additional, don’t automatically consider completely replacing your existing policy(s). Sometimes, especially if your policy was in place before your diagnosis, it can be useful to keep that policy and have an additional policy, as a top up to suit your needs. If there would now be a premium increase or exclusion added on to your policy, then the value for money on your existing policy may be better.

Another thing to look out for is a guaranteed insurability option on your current insurance. Not every policy will have this, but if you do then this should allow you to increase the value of your existing policy without having to go through further underwriting. This option is linked to certain life events, such as getting a higher mortgage or having a child.

Existing Policies Video

Another benefit of personal protection policies or group policies, is the value added benefits that they might offer. The benefits range from insurer to insurer but can include things such as access to remote 24/7 GP services, second medical opinions upon diagnosis of a condition or treatment, access to specialist nurses who can help you to understand your health and put you in contact with people who can help further.

These are things that can be accessed by people who take out the policies, but also often by their partners and children until they reach adulthood. These benefits are typically non-contractual and can change or be removed over time.

Value Added Benefits Video

1. Are you comfortable – does the adviser put you at ease, do they sound as if they genuinely care about helping you? If you do not feel comfortable with the person, listen to your gut, and try speaking to someone else.
2. FCA number – all regulated financial firms have an FCA number so that they can operate. If someone is guarded about giving you this, or refuses to give you the information, it’s a good sign of a scammer.
3. Whole of Market – is the adviser researching a fair analysis of the whole of the insurance market, or are they ‘tied/restricted’ to a panel of insurers?
4. Reviews – check out the reviews that they have received from their clients, these are usually on their website, or you might be able to search for them on specific sites such as Google, Feefo, VouchedFor and Trust Pilot.
5. Recommendations- there is nothing quite like a personal recommendation, for starting out on a positive journey with an adviser. If you know someone that you trust and they say that an adviser has done a good job for them, then it’s certainly worth giving them a go.