Protection providers and ‘protection products’ are industry terms used to describe an insurance contract that is ‘pure protection’, pure protection contracts are typically long term contracts with capped surrender values at point of claim determined by the premiums paid and will have no cash in value, they are there to provide financial protection in the event of death, diagnoses of certain diseases, if you become incapacitated due to illness or are unable to work due to sickness or injury. They shouldn’t be confused with general insurance products such as car insurance; protection products are more complex to arrange. They are also underwritten differently, general insurance contracts are mostly underwritten at point of claim (such as when you claim on your car insurance or buildings and contents insurance), protection products are mostly underwritten at time of application, meaning when you need to make a claim, most of the work has been done and it’s simply a matter of submitting a valid claim.
Whilst this is not an exhaustive list, the most common forms of protection products would be things you may have heard of before, namely:
• Term Life Insurance
• Family Income Benefit Insurance (a different type of life insurance)
• Critical Illness Cover
• Income Protection Insurance (also known as Permanent Health Insurance)
• Private Medical Insurance
Protection policies play an important part in financial planning, whilst the financial protection industry has not had as many obstacles to overcome as the mortgage industry, like most other industries, it has been affected by the COVID-19 pandemic.
When applying for insurance, whilst there are fewer personal documents required than with a mortgage, the advisor is still required check your identity, and, as with mortgages any identification provided needs to be certified as being:
‘A true copy and likeness to the client’
As with mortgages, if they are unable to meet you and personally check the document, this may prove difficult.
The same solution applies to insurance providers as with mortgages, if your advisor has the experience and the right systems in place, this shouldn’t prove an issue.
Coronavirus and New Insurance Protection Policies
In light of the risks associated with contracting COVID-19, protection providers have, similar to mortgage lenders. adapted their application process.
Different providers require different things depending on the cover being applied for, the additional information required would impact on application forms, additional data capture forms and declaration of health forms. Standard forms that most protection providers require completing in order to process your application.
A provider is likely to ask if you have:
• Had a continuous cough and/or a high temperature
• Been advised to self-isolate
• Tested positive for Coronavirus
• Been in direct contact with someone who’s been confirmed or suspected to have Coronavirus
If the answer to any of these questions is yes, it’s likely the provider will suspend your insurance application for a period of time, possibly until you have medically been given the all clear or until the pandemic has ceased to cause concern.
Regarding self-isolating, one insurance providers definition of when you should answer that you have been self-isolating is when:
• Medical staff have specifically advised them to do so
• You’ve been advised to shield for 12 weeks due to being defined on medical grounds as being extremely vulnerable from Coronavirus
• You’re self-isolating due to symptoms they have or have tested positive for Coronavirus
• You’re following guidance due to being in direct contact with someone who has symptoms (household isolation)
• You’re following guidance having recently returned from an affected area
If you are working from home or have decided to self-isolate following general advice to avoid social interactions, this would not typically be considered, from an insurers point of view, as self-isolating on medical grounds.
Different protection providers will require similar information, although it may be worded differently. If you are unsure about applying for any financial protection products, you should seek advice from your advisor who should be able to obtain correct information pertaining to you specifically.
The processing, as with mortgage’s has been affected with the majority of insurance provider employees working from home and accessing the personal and sensitive data a provider requires when onboarding new clients. However, the providers have adapted and applications are still being accepted and processed.
Medical Reports and Examinations
In order to correctly cost the premiums for a given policy, it’s common practice for a protection provider to write to your local GP, dentist or opticians and request a copy of your medical reports.
This is so they can assess the likelihood of you making a claim and allows them to set the premiums accordingly. Your medical reports would also be used in conjunction with the information provided on the application form, other data capture forms and any declaration of health forms which require completing.
Whilst social distancing and people working from home mean that obtaining medical records are difficult. The main obstacle in obtaining a medical report is the pressure being placed on local GP’s and healthcare professionals at a time when their expertise in required to assist people from a purely health perspective. They simply don’t have the time currently to respond to requests for medical reports.
The same is true of medical examinations prior to a protection policy being accepted. In certain circumstances it may be required that you need to go for a medical examination prior to being accepted by a protection provider, social restrictions would inhibit this.
There is a service provided by the NHS, ‘Patient Online’, which allows you to access an online copy of your medical records free of charge 24 hours a day, 7 days a week. To obtain a copy of your medical records you first need to make a formal Subject Access Request, either in writing or by email, this will incur an administration fee of up to £50. Although your medical record is not the same as a medical report, if you are unsure of any health issues, and are unable to seek medical advice, it may offer some clarity to a potential insurance provider.
Please note: It is possible to obtain most forms of protection insurance without the need for a medical report or examination.
Your broker should be able to assist with this
Insurance without the need for reports and examinations are becoming more common with improvements in technology, whether this would be possible or not, will be dependent on your individual circumstances. The provider will want to know such things as, are you in good health, do you have a history of illness, are you currently being treated for any medical conditions and more. They will want to know if you smoke or use other tobacco products and if your family has a history of illness or disease.
There will be lots of information required for an insurance provider to produce an illustration and there will be basic health questions asked by all providers but ultimately, the information required will depend on your individual circumstances.
It’s important to note that when you apply for any insurance, you should always answer any questions honestly and truthfully, not being completely upfront about any issues may invalidate the financial protection when you need it most.
If you want to speak to an advisor regardin your financial insurance protection needs, feel free to get in touch.