Chris Pollard, head of underwriting, claims and operations at Friends Life, said: “A decent adviser would have a word with the underwriter at outset, and make a note on the file after establishing the first opportunity when it could be worth revisiting.”
There is also much to be said for revisiting all non-standard risks every twelve months as a matter of routine and phoning a few underwriting helplines to see if more favourable terms are available. Even such a small time lapse could enable significantly improved deals with those suffering from bad backs or high blood pressure, or who have lost weight or given up smoking. (See Box).
Indeed, for some conditions, even a time lapse of only a couple of months can prove all-important. In May this year, James Caplan, managing director of London-based specialist intermediary First Financial, arranged a single life critical illness cover policy with a sum assured of £454,000 for a 36-year-old man with Legal & General. The client, who was paying a premium of £131 a month, was excluded for malignant melanoma as a result of having a few moles, some of which his GP did not consider worth removing. However, in July Mr Caplan managed to get the exclusion removed.
He said: “I went back and challenged the decision after taking advice from my wife, who is a doctor, and contacted other life companies as well. Because the others would offer standard terms, Legal & General removed the exclusion. IFAs should be revisiting risks and accessing medical knowledge to challenge any decision they don’t agree with.”
Improved terms on heart conditions may not be available for at least five years, but it may prove to be worth the wait. For example, a 55-year-old who has a heart attack may be granted cover six months after the event with a loading of 2.5 times standard terms. But this loading could be halved five years after the heart attack.
Improved terms for cancer are also unlikely to be available for five to 10 years – although it can happen earlier in cases where temporary cover with exceptionally high loadings has been granted.
Alan Lakey, senior partner at Highclere Financial Services, a specialist intermediary based in Hemel Hempstead in Hertfordshire, managed to get a cancer exclusion removed from a life and critical illness policy 10 years after a client had undergone an operation for testicular cancer. The client subsequently had a claim for cancer in his remaining testicle, and received a £93,000 payout from Friends Life.
The client originally took out £93,000 of single life cover for a 25-year term with Aegon in 2005 when aged 37 but, because he had suffered testicular cancer five years earlier, had an exclusion imposed for cancer as a whole. He also incurred a £38.11 monthly premium loading, resulting in a total premium of £89.45 a month.
