12.10.18 – Life Insurance and Critical Illness Cover with a Pre-Existing Medical Condition

Now that I’ve had my transplant, this could be a good time to look into insurance and policies to cover myself and family for now and the future. Following World Mental Health Day earlier this week, i thought i’d briefly touch on life cover and MH. 

Life cover is a term used to describe life insurance or death cover which can provide a cash lump sum in the event of your death, or if you become diagnosed with a critical illness. (Critical Illness cover can be added to your Life insurance policy or be taken out separately) 

By paying a monthly premium or a lump sum to your insurer for life cover, you can safeguard your loved ones from financial hardship if you die or suffer from one of a list of illnesses. 

At some point in our lives we may need to think about Life Insurance. It’s common to get a new policy after a major life event – such as having a baby or moving house, however it can be a good idea to buy at any time, as the insurance premium you’re offered could be cheaper. They recommend you speak to an underwriter in order to discuss life insurance and critical illness cover. It’s not always a simple process, especially if you have a hefty past medical history like me, but, it will provide protection and peace of mind for yourself and your family.  

It has taken me a while to get anywhere with it, however, following my search, i have gathered together some resources, to put you in the right direction on who to contact.  

Before I give you the details, there are a few things you’ll need to know.  

The two main types of life insurance are:  

  • Level Term  
  • Decreasing Cover  

Level Term pays out only if you die within the term. For example, if you take out a 25-year policy, your family could only claim if you were to die within 25 years. If you died later, there would be no pay-out. 

Decreasing Term Insurance is where the pay-out gets smaller over the term. For example, the policy might pay out £100,000 if you died in the first year, but only £1,000 if you died in year 25. Decreasing term insurance is often linked to a repayment mortgage because the amount owed reduces over time. 

Whole of Life Insurance/ Life Assurance can be taken out if you require a longer policy. The term ‘assurance’ means a pay out is guaranteed to be made upon death, rather than during a fixed term. This policy can be a little tricky to take out than the rest.  

It can be tricky to find affordable life insurance if you have a pre-existing medical condition. Some insurers will turn you down straight away and others will exclude the condition. For example, if you have diabetes, the policy would not pay out if you were to die from the disease. You would, however, be covered if your death was not related to your condition.  

There are a number of specialist insurers that offer life cover to people with pre-existing conditions, but be prepared to pay a higher price due to the higher risk of a claim. 

Always be honest with the insurers. If you miss out one small medical detail hoping that it will decrease the costs, they may be able to use this against you to avoid paying out if you may need to make a claim. Some insurance companies will ask questions which may not seem relevant, so have your medical file out at the ready. 

Ensure you know the amount you need to be covered by. This is usually the amount you plan to borrow when taking out your mortgage. 

Hobbies, fitness levels, weight and height can all affect the cost of cover. They even look at your postcode as some areas may be more of a risk factor than others. For example, deprived areas pose a risk of being more likely to make a claim compared to more expensive areas to live. Another reason would be if you lived in an area where mortality rates are low, it’s more likely that you will live longer and therefore benefit from a cheaper premium. On the other hand, if your postcode reports a high mortality rate, you present a bigger risk to the provider, and can expect to be quoted a higher premium based on location alone. 

Many insurance companies will not pay out if you pass away from drug or alcohol abuse, suicide or a dangerous sport or hobby.  

Make sure you keep the insurance companies aware of any change in circumstances; otherwise the cover may no longer be valid. Amendments may also be made, however this may result in a higher premium. 

If all else fails during your search then look into Guaranteed Acceptance Life insurance. There is one particular company I have looked at called Essential Supplementary Medical Insurance. ESMI offer guaranteed acceptance insurance cover for those aged 18 – 61, regardless of their medical history.  There is no need for any medical questions, medical examinations or gathering of any further medical evidence.  This means that you should be accepted for the policy even if you have previously been declined cover due to your medical history. However! It is important to be fully aware that any claim relating to any pre-existing medical conditions (or other conditions related or associated to these conditions) will not be covered.  The level and cost of the cover is guaranteed for a five year period after which it will be determined by your current age band. 

Critical Illness Cover

Critical Illness Cover pays out a full lump sum if you become critically ill or diagnosed with a terminal illness. This may be something to think about if you are the main earner. However, if you get a cash pay-out after being diagnosed with a listed illness, the policy is effectively finished and so no life insurance pay-out if you die at a later date. When taking out life insurance, critical illness cover is usually offered as extra cover. There aren’t many companies that offer this as an individual policy.

One of the most important things to think about when taking out Critical Illness cover is each companies small print. For example, some cancers may not be covered unless at a later stage, so its always important to be aware of what the ‘exclusions’ are.

Due to my medical history, I knew this wouldn’t be an easy task, but hopefully I’ve made it easier for you to find the right quote. Even if i have had my transplant, im still considered a risk, this is because my health has been significantly impared. Immuno-supressents to avoid rejection, come with a number of side effects and increased risks of infections etc.

The first stage of my search started a couple of days after my first meeting with my mortgage adviser. He had organised a phone appointment with an underwriter for Aviva. I found that I was able to minimize a lengthy call by mentioning my medical history as soon as possible. This completely put them off covering me at all. Expect this to happen to you, especially if you are deemed a high risk.  

Price comparison websites (moneysupermarket, confused.com) do the hard work for you by comparing costs and policies of companies.  This was my second port of call. I would recommend contacting them by phone, as you may be unable to give full details when completing an online form. Some websites offer a ‘request a call back’ service which helps avoid call costs. Unfortunately, the companies I used were unable to help me as I had ticked too many boxes. My next option will be to look at NPL Financial Management, as suggested by British Liver Trust, so i will let you know how far i get with them.

In regards to mental health, some companies require you to be free from any hospital admissions, suicidal thoughts or attempts for at least 12 months to reduce the risk of claiming. Keep in mind, that if this may affect you, seek advice from the charity MIND. They provide information on looking for insurance with a MH condition.

Click here to sign up to organ donation! It is equally important to discuss your wishes with your family, as they can override your decision. Thank you!

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