Life Claims: Myths and Insights
Wed Oct 17 2018
Life Claims: Myths and Insights
Through the payment of claims your clients and their families can overcome the financial fallout which occurs when they are seriously ill or have died. It’s the reason why, as a Financial Broker, you recommend protection products because having a claim pay out, when it’s needed most, can make a significant difference financially.
Leading protection specialist Royal London’s Underwriting and Claims Lead, Colette Houton, discusses some of the myths surrounding claims in the life insurance industry and the claims insights which can dispel them. Colette began by saying:
“Unfortunately, we all know there are some false ideas widely held by the public when it comes to life insurance. As Financial Brokers, your advice informs your clients otherwise, but it is a task in itself to re-educate customers away from these myths. The following insights show the reality of life claims in Ireland.”
Myth: Insurance providers don’t pay claims
“‘My insurer refused to pay out’ – most of us have encountered a headline like this over the years and this is probably one of the biggest, if not the biggest, life insurance myths out there. Headlines like these can be troublesome for both Financial Brokers and providers as they feed the pervasive myth that the majority of claims aren’t paid out. At Royal London our focus is on providing the best customer outcomes always, so the payment of claims is the key moment of truth for us, and our aim is to pay all our claims.”
Reading such stories can be alarming for your clients who may be regularly contributing to their life insurance or specified serious illness policy. When in fact, they should rest assured that 99% of all protection claims were paid out by Royal London Group in 2017.* This figure shows that claims are seldom declined and when they are the reason is usually because of serious non-disclosure.
Myth: I am young, I don’t need cover
Royal London’s claims analysis shows that in 2017 the youngest person to claim for Specified Serious Illness was just 28 years of age, while the average claimant age was 47 years. Colette commented:
“Unfortunately youth does not make you immune from death or serious illness. And, it is a heart-breaking fact but insurers are seeing children’s claims getting more common.”
Here is one example of a claim paid in relation to a young Royal London policyholder. It was on a serious illness claim for a 33 year old woman who had Hodgkin’s lymphoma. The policy was in force for 2 years.
Myth: I am healthy, I don’t need cover
Royal London’s 2017 claims statistics highlight that it’s not always the most likely scenarios which result in a claim. Here is one example of a claim paid in relation to a non-smoking Royal London policyholder. It was on a terminal illness claim for a 49 year old man who died from lung cancer. The claim paid out €1.9 million. The client was a lifelong non-smoker.
“We deal with all manner of claims situations here at Royal London and we see that even those who live a healthy lifestyle, exercising regularly, eating a balance diet and not smoking, aren’t guaranteed to not get seriously ill. Life can be unfair but at least if your clients have sufficient insurance protection in place they can be secure in the knowledge that even if the worst happens, they and their loved ones are financially protected at a time when it’s needed most.”
Myth: Making a claim is difficult
Claims are more likely to be paid out to your clients when the product you recommended is the best available in the market. For example Royal London’s specified serious illness cover has the most comprehensive cancer cover in the market. But when it comes to your client making a claim the claims philosophy and claims servicing of the life insurer is key.
Colette remarked: “Making a claim shouldn’t be onerous for your clients or their family. When Royal London reviews claims cases we do so in the spirit of our aspiration to be known by Financial Brokers, like you, and your customers as the most trusted and recommended life insurance provider in Ireland. That’s why death claims are paid with a minimum of evidence and why we have introduced features like our Funeral Payment Helping Hand, which is designed to help alleviate some of the financial burden which can arise when seeking a grant of probate in Ireland.
“Of course, it goes without saying that disclosure is very important when it comes to how easy or difficult making a claim can be. Good disclosure ensures that a valid client claim will always be paid out. Our latest Underwriting Guide offers an overview of common disclosures to help you discuss medical and other underwriting information with your clients and we hope that it will be a useful tool in helping to prevent non-disclosure.”
“Finally, it’s worth remembering the good that’s done through the payment of claims. As your client or their loved ones process a devastating, life-altering event like a death or a serious illness diagnosis, the effect of a claim pay out easing the extra burden of financial worry can be truly transformational.”
Royal London’s latest Underwriting Guide can be found on its Broker Centre; www.royallondon.ie/brokers
* Figure includes Life, Terminal Illness, Total Permanent Disability, Specified Serious Illness and Income Protection. Group protection figures from Royal London UK Intermediary protection business and Royal London Ireland claims paid (01 January 2017–31 December 2017).