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Impaired Life Insurance Guide
What is 'Impaired Life Insurance'?
Life insurance is generally classed as impaired when there is a factor that would cause the underwritten risk to be higher than a 'standard application'. An application can be impaired for a number of reasons, for example:
- Pre-existing medical conditions
- High risk hobbies/pass times
There are thousands of different reasons why an application may be classed as impaired which all come with different elements and levels of risk. The job of the insurance provider is to classify that level of risk and apply a rating or increase in premium that takes that in to account.
Why is my premium more than a standard application?
An increase in a premium could be for thousands of reasons as mentioned above and the difference will vary from one insurance provider to another.
For example:
A person with Type 2 Diabetes applies for Diabetes Life Insurance with 2 different companies and provides both companies with exactly the same information.
Company 1 offers: £25 per month
Company 2 offers: £32 per month
The reason for the difference in premium between the 2 providers is not a mistake, it is simply that Company 1 has lower underwriting limits for Diabetes Life Insurance than Company 2. This can be due to a number of different factors such as claims history, re-insurer terms or underwriting guidelines. There are also many different factors which must be taken in to account when underwriting an application for Life Insurance such as the severity of a medical condition, how often somebody is at risk and how high the risk is in terms of occupations or sports.
How do I know who will be the cheapest?
It can be very difficult to know who will offer the best premium for an individual's particular circumstances without knowing exactly how each insurance company's underwriting works. This is where speaking to a specialist company such as The Insurance Surgery can be an advantage as they will know how each insurer will view your application.
Actual case study (May '11 - The Insurance Surgery)
Client applied for Life Insurance through The Insurance Surgery, details as follows:
Sum assured: £120,000
Term: 25 years
Applicants: male 25 (non-smoker) & female 24 (non-smoker)
Medical history: Male diagnosed with Pancreatitis in October 2010
Previous applications: Company 1 - £48 per month
Company 2 - £55 per month
The Insurance Surgery were able to obtain cover for Joint Life Insurance for £10 per month!
What is classed as 'Impaired'?
As mentioned above, there are thousands of reasons why an application may be classed as Impaired and they can be broken down in to several main categories. Some examples of pre-existing medical conditions are:
- Multiple Sclerosis Life Insurance
- Mental Health Life Insurance
We aim to provide a guide to each of the major medical conditions throughout the coming months in our subsequent newsletters. Keep an eye out for a newsletter that may be useful for you and your circumstances and if there is anything that we haven't mentioned and you would like us to then please feel free to email enquiry@theinsurancesurgery.co.uk and we will do our best to include it for you.
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