He adds: "Normally details about their health is covered fairly brief in the early stages. If they give us an indication that they’ve got some pre-existing medical illnesses, we would normally ask them to complete a medical questionnaire in advance.
"This is so we can phone around the pre-underwriting teams with the insurers to enquire about their position with such medical ailments and the likely premium loadings or exclusions. This will ultimately save us and the client’s time so that we do not have to submit multiple applications.”
Improving the process
To improve the amount of time it takes for insurers to make their decision, Chan has called on the insurance industry to follow in the footsteps of the impaired life annuities market, which has been digitalised to offer an instant quote through adviser portals after entering a client’s medical and lifestyle information.
He adds: “If the insurance industry can do something similar in the near future, that would help clients and advisers alike, although some cases require GP reports or nurse examinations which can add to the complication and can cause significant delays still.”
Chan says such a move by the industry is especially important as there is no common ground in medical questionnaires, with different insurers asking different questions.
In his experience some insurer policy prices are pushed up by medical issues, while others are bumped up by lifestyle factors.
He recalls a recent case when a client, who was in good health, wanted life and critical illness protection to cover his outstanding mortgage.
One insurer had loaded his premiums from £73 each month to £112 and would not offer total permanent disability (TPD), due to his BMI and alcohol consumption.
However, when Chan went back to the client to obtain more information and then spoke to alternative insurers, he managed to find a reputable insurer who was able to offer the cover with no loading and offered TPD too.
Chan says: “The trouble is there is no common medical questionnaire for underwriting, as each insurer will ask different questions related to the illnesses and sometimes they will ask other questions outside of their condition that is not immediately obvious to an adviser.
"So, you learn as you go as to what additional questions they will ask, and you go back to the client for their responses, and then onto the next insurer, and repeat.
"By the end of this process, you should get an idea of the various loadings and exclusions and can proceed to apply to the insurer with more favourable terms. This process can take several hours.”
