Life Assurance ABC

Tumors With No Insurance

Three years ago when James Halliday was informed that he had cancer of the brain, life was would never be the same but following a life-saving operation his recovery has been good. Yet he lives with the knowledge that the cancer could  at some stage in the next 10 years. He will also have to take tablets to lessen his epilepsy for the rest of his life.

Mr Halliday, who is now 41, believes he is the most “fortunate man alive” to have survived. Nevertheless he is unable to get life insurance.
Mr Halliday and his wife have a 3-year-old son, Jason, and a year ago they moved from Sussex to Barnsley in Yorkshire. The family remortgaged 85,000 pounds with the Lloyds TSB but Mr Halliday was unable to protect the remortgage with life insurance cover in his name.

“The Lloyds TSB’s underwriters turned down my application for life assurance. Sally has Life insurance and critical illness insurance cover for protection for you home,” he says.

The probability of getting life insurance are on the whole doubtful if a request is made during the first 5 years of having been told that you have a a heart attack or a nasty kind of cancer. Should the patient make a full recovery within a set period of time, usually up to three to five years, insurers will think about insuring them again but will probably apply a “loading” on to the monthly payment. In many circumatances this may be as large as eight times the price that other clients pay.

During the first 5 years after an operation, someboby in Mr Halliday’s circumstances would be refused life assurance. After this period, life assurance cover should be easy to get “but at a highly priced premium”.

The life insurance company which underwrites for high-risk clients (those who play perilous sports or with serious illnesses is the Insurance Centre Special Risks. It contends to have a victory rate of seventy five per cent when placing its customers with insurance companies. Special Risks Services says that it would be a further year before they would be able to contemplate an application from Mr Halliday.

Rates will undoubtedly be very expensive because of his epilepsy and compared to the general population there would still be an increased mortality risk. Unless an insurance cover specifically excluded cancers, Mr Elliot would without doubt be refused any critical illness protection.

Therefore as a result of  specialist financial advice, the Halliday family has saved up eight months emergency money and put it to one side, to all intents and purposes a self-insurance cover.

And there is a little good news for Mr Halliday. Cheltenham and Gloucester, his previous mortgage provider, has permitted him to maintain 50,000 pounds of life life assurance from an existing policy – albeit at a cost of forty pounds a month. This type of policy is called a Guaranteed Insurability Option (GIO) and means the insurers will allow the insured up to half of the original amount assured without underwriting.

On the other hand it is not just serious medical complaints that can impact on  life assurance cover. Simon Harris, chairman of Manchester Rugby Club had his first application refused because of a minor skin condition. Various trips to doctors and no end of phone calls to Legal and General they finally sorted things out. Mr Harris’s suggestion to anyone in the boat is to make an application first and support it with a full medical report.

Your Life Insurance Premuims Could Rise Through Smoking, Drinking Or Ill-health

If you have a family history of poor health or if you drink or smoke excessivly you might be under the false impression that critical illness cover or life insurance cover may be extortionately expensive. A manager at Scottish Mutual, Mr X, says this is rarelythe case, “Some of those eating ‘too much’,excessive drinking or heavy smoking may well shy from protection for fear of being unfairly penalised for their nasty habits. Therefore, they will most likely find that these essential forms of financial protection cost even less than they thought.”
 Mr X a specialist re-insurer, says only 25 % of the working population have life insurance cover and only 20  per cent have CIC, even though it is generally deemed that if you are employed and/or have dependants and a mortgage, this safety is essential. Many, many people are taking prohibative risks.
If a person were to die their life insurance policy will pay out on death and hopefully will be enough to repay the mortgage, and/or provide any dependants with financial security.  In the case of critical illness insuranceit administers a dividend and helps at this time.  Even though medicine is improving all the time and people are getting better from life-threatening illness, they are usually unable to work temporarily or are forced to stop completely; this is when a tax-free lump sum can create the financial security needed.
If a person does drink or smoke premiums will be higher but they do vary a lot between one insurer and another. And  they also vary between CIC and life cover. FriendsProvident doesn’t raise premiums until a person is consuming the equivalent of 4 pints daily.  For a non-smoking 35year old, consuming less than 45 units weekly, for 100,000 pounds of life insurance cover, the standard rate is 17.90 pounds per month.  If you drink between 45 and 65 units weekly it increases to 28 pounds per month.
In comparison, it will cost a 25 yr old non-smoker 18.70 pounds per month for 100,000 pounds of critical illness cover . For a smoker this increases to 32.70 pounds monthly, but the premium only rises again if you smoke  more than 2 pkts per day.
**A family history of conditions such heart disease or diabetes does not mean that the insurance payments will  be considerably higher.  A 36 year old banker,  Mr X, comes from a family that has a lot of members suffering from high blood pressure although his grandparents and his parents do not. Some time ago, he and his wife took out life insurance and CIC with Axa from Scottish Mutual, giving them a cover of 125,000 pounds.  Their monthly insurance premium costs 38.50 pounds and Mr L was quite pleased that his families medical history didn’t change what they pay.
A director of Money Supermarket, Mr O, says if you cannot afford to do both, it is sensible to cover your mortgage with life insurance and then take out as much critical illness cover as is affordable.
 ”Any one who can afford it should have critical illness cover,” he says. “If you’ve got dependants you should have life insurance and critical illness cover. The only people who may not need critical illness are those with good, not just standard, employee benefits.”

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