Online vs Human

Insurance Cover – Online vs Human

January 18th, 2018

Life insurance isn’t the most engaging of topics at the best of times. If the thought of life insurance is making you want to sink in to an early grave, bear with us. Even if you come away with a half-smile, having learned something mildly interesting, it’ll be worth the read.

As the technological landscape changes, so does how we get around, how we communicate and how we source products. It used to be that we implemented technology to help us adapt to a more demanding market, but it seems of late it’s us who are now having to adapt to an ever evolving, unrelenting, technology-ridden culture. Technology has certainly made some things easier now. But does that mean they’re better?

With protection products, like anything from music to underwear, you can buy it online. It’s fast. It’s easy. And you can do it at your leisure. So, why not buy online?

If you know what you’re looking for and genuinely read the Terms and Conditions for everything you buy or subscribe to, there’s no reason not to buy protection products online – but at your own risk.

By buying life insurance, critical illness cover or income protection online yourself, it’ll mean you won’t have access to the Financial Services Compensation Scheme as the onus is on you to fully understand what you’re purchasing and its limitations. If, like 73% of people in 2014 (source: Guardian), you do not fully read the T’s & C’s, you could be in for a huge surprise when it comes to a claim.

If you misunderstood a question and accidently answered incorrectly when applying, the insurer could class that as ‘non-disclosure’. Simply put, it could mean they don’t pay out. This often adds to the myth that life insurance policies never pay out. To ease your mind with this regard, the Association of British Insurers (ABI) confirmed in 2015 98.2% of all term assurance policies (the most popular type of life insurance policy sold) paid out (source: ABI).

On critical illness policies, there are definitions the insurers use for illness covered. These definitions have a minimum standard laid out by the ABI. For example, the definition for stroke with some insurers will be such that the claimant will have to have been told by doctor (or medical practitioner) they’ll have permanent residual symptoms brought on by the stroke in order for them to pay out a claim. Other insurers may say they’ll pay out after 24 hours of the claimant having symptoms of the stroke.

When buying online, there is little material available and that which is available is cumbersome and non-specific. ‘Key facts’ documents rarely have the full definition in writing. You’ll have to have purchased the policy and had ‘the handbook’ sent to you via post for you to see the particular definition – or search it online, then compare with other insurers. Then, liaise with someone with a medical background to establish which definition is more robust. Even when this is done, you’ll be led to complete an application online and if you have a medical disclosure, family history of things like diabetes, cancer or Huntingtons Disease or your occupation requires overseas travel, you could be stuck with a price increase (known as a rating or loading) and/or have exclusions applied to your policy.

Sadly, most people will either just take it on the chin and keep the policy they applied for, as they don’t have time to go through another application, reapply with another insurer and get a similar situation, or they’ll give up on protecting themselves completely.

This needn’t be the case.

If you speak to a professional, preferably someone with an R05 qualification, they can ask about health, lifestyle, occupation etc up front. They can also speak to the underwriters to establish an accurate quote. Furthermore, they will have a good understanding of the quality of the policy (particularly with critical illness cover and income protection). They will also be able to give sound advice around how best to structure the cover to keep costs to a minimum.

Give one of our Protection Specialists a call today and we’ll do just that.

This article was created by Kish Gohil, senior protection consultant.