Life insurance....a tale of hindsight..

[RogerS]

…or how I really cocked things up. A cautionary tale that may prevent anyone considering life insurance from making the same mistake that I did.

Last night over dinner the conversation came round to life insurance. I have a policy with Aviva. It’s needed to protect LOML in case of my demise to clear the mortgage and have money to get men in to finish the house ready for sale. I do have a policy with Aviva but with a heavy loading on the premiums because the doctor, during the insurance medical, heard a mild heart murmur and very faint carotid bruit? Emphasis on 'mild' and 'very faint'.

In an attempt to get a lower premium I recently applied to Scottish Widows. The quote came through yesterday. Premium even more than the current policy. And it’s all to do with ‘heart murmur’ and ‘carotid brut’ being on my medical record.

I now realise (hindsight) that the scale or magnitude of either murmur or bruit, as far as underwriters are concerned, is pretty much irrelevant, because the qualification ‘mild’ and 'very faint' have noimpact on reducing the hefty premium loading. It is all to do with those two words ( murmur and bruit) being on your GP medical record.

But at the time of the Aviva medical, my GP…my NHS records…had zero knowledge of either murmur or bruit. Nothing. Nada. So had this remained the status quo, going along to Scottish Widows may well have had a completely different result. More than likely, in fact, because it was a simple at-home nurse checkup. Not a stethoscope in sight. Scottish Widows would have had no knowledge of murmur or bruit. No loading therefore. Premium much less than the Aviva one. Result.

But I didn’t keep quiet, did I ? My error way back then was in thinking that I could provide Aviva with reassurance, based on tests and scans, that the murmur and bruit were very, very minor and so get the loading reduced. It’s the ‘problem solver’ in me. The inner-engineer. Wrong. Wrong. Wrong. To get these scans, you go to your GP and you’re then stuffed as those two words then appear on your medical record in perpetuity. There to give any other life assurance company the heebie-jeebies. I should simply have said and done nothing. Simply applied to another life insurance company and chose one without a doctor's medical.

It was a very expensive mistake.

Ain’t hindsight wonderful.

 

[Terry - Somerset]

If a claim is made (not for decades one hopes!), the failure to have informed your insurers of a relevant material issue (or something they could regard as relevant and material) may compromise any claim.

I would be wary of insurers which do not require medical history etc. I know some may pay out automatically providing you survive the first year - but I suspect their premiums are correspondingly higher because of their greater risk.

There is an wider concern. As longevity can be determined with greater certainty from genetic data, insurance will become more a savings plan against the costs of a (reliably) forecast future event (ones demise) rather than spreading the risk across an entire population. Naff genes = expensive insurance!

 

[niall Y]

All insurance is a gamble. Except the insurers are hedging their bets by finding out about the risk That way they can maintain profitability.

The thing is, you now know about your heart murmur - that information is out there - so, this is the new reality. The question to ask is - would it be better not to know?. I assume answer would be 'yes', if you only wish to have cheaper policy, But for 'peace of mind' would the answer be the same?

I suspect @Terry - Somerset is is right when he sums up the future of insurance. Except it isn't really insurance if the many aren't paying for the few

 

[RogerS]

If a claim is made (not for decades one hopes!), the failure to have informed your insurers of a relevant material issue (or something they could regard as relevant and material) may compromise any claim.

In the event of a claim, they still would be unaware of the pre-existing medical condition such as it was.

I would be wary of insurers which do not require medical history etc. I know some may pay out automatically providing you survive the first year - but I suspect their premiums are correspondingly higher because of their greater risk.

Well, unless you're going for a minimal amount of money, such as £5000 then, true, no check on the medical record. But I can assue you that any life insurance company will want to see your medical record when the amount insuted approaches anything above 'insignificant'. Easy enough to check by Googling 'medical underwriting limits'.

There is an wider concern. As longevity can be determined with greater certainty from genetic data, insurance will become more a savings plan against the costs of a (reliably) forecast future event (ones demise) rather than spreading the risk across an entire population. Naff genes = expensive insurance!

I think you're mixing up Critical Insurance Cover and/or Healthcare Insurance with Life Insurance (Assurance). Also lifestyle will have just as much influence ...if not more..on premiums than genetics..which is going to be a very gnarly problem for life companies I think. A long way off though IMO. They are much more interested in, for example, if you are or have been a smoker. Even when you say 'No' or 'Never' you will do a cotinine urine test.

 

[RogerS]

The thing is, you now know about your heart murmur - that information is out there - so, this is the new reality. The question to ask is - would it be better not to know?. I assume answer would be 'yes', if you only wish to have cheaper policy, But for 'peace of mind' would the answer be the same?

I suspect @Terry - Somerset is is right when he sums up the future of insurance. Except it isn't really insurance if the many aren't paying for the few

I'm not sure what you're trying to say. Of course I would like to know but also I would then do my own investigations...for example, you can get an echocardiogram done privately (as did I) without contacting your GP. I could then take a view.

And it's not a question of a 'cheaper' policy ...unless your Elon Musk with a bootful of ££££. The premium they quoted was unviable for me.

Of course it is insurance. Where do you get the idea of 'many' paying for the 'few' ?

 

[Jameshow]

My wife has a condition which she mentioned at the time, which has now got worse, were she to change policy she would get a far higher premium and a lower cover. The IFA said what ever you do don't change that policy!

 

[Blackswanwood]

If a claim is made (not for decades one hopes!), the failure to have informed your insurers of a relevant material issue (or something they could regard as relevant and material) may compromise any claim.

That’s not correct Terry. I refer you to the Insurance Act 2015 which changed the basis of disclosure from “utmost good faith” to the proposer simply having to honestly answer the questions asked by the underwriter and is far more reasonable expectation.

 

[L M Joinery]

Talking of insurance I am having trouble with my pet insurance currently. Worthless

 

[niall Y]

.

Of course it is insurance. Where do you get the idea of 'many' paying for the 'few' ?

Is this not the basis of all insurance? Put in its simplest terms everyone pays into a fund and those that have to make a claim can also take out of it. It would only work if a limited number make claims, , Hence, the many paying for the few.

 

[alan895]

Having worked in group risk insurance for many years I sympathise. Although I dealt with policies for businesses rather than individual cover, the same level of pedantry did exist over the smallest things. Too many people in certain areas were very "risk adverse" when presented with medical evidence, past illnesses, historic work absence levels etc. even for things that happened 10+ years ago - invariably it was all based on statistics and probabilities rather than informed medical opinions.

 

[RogerS]

Having worked in group risk insurance for many years I sympathise. Although I dealt with policies for businesses rather than individual cover, the same level of pedantry did exist over the smallest things. Too many people in certain areas were very "risk adverse" when presented with medical evidence, past illnesses, historic work absence levels etc. even for things that happened 10+ years ago - invariably it was all based on statistics and probabilities rather than informed medical opinions.

Very useful insight, thanks. I'm minded to do a Farage.