Pre-existing conditions exclusions, occupational restrictions, and hazardous pursuits exclusions are a growing subject of inquiry when advisers talk to us at the moment. Quality Product Research does not currently rate products with pre-existing conditions exclusions and limited underwriting, but we will do so soon. Here are the main categories of exclusion and some of the issues with each that advisers may wish to consider and discuss with their clients:
Pre-existing health conditions are often excluded by low / no underwriting contracts. Consumers with chronic ongoing health problems are often well-informed of their conditions and may be able to make an informed choice about opting for cover that will exclude it. However, they are also apt to overestimate the impact the condition would have on their ability to obtain cheaper cover by going through the underwriting process. If they are prepared to enter into the underwriting process it can be valuable for them to do so.
Occupational restrictions are increasingly also being included in low / no underwriting contracts. This is because while early death (before age 65) is relatively rare, it is often caused by accidents. Some are work related. A risk with such exclusions is when they are not tied to an occupation but a specific hazard – such as heights. My wife recently walked a track alongside cliffs that would have been excluded by most height restriction clauses.
Hazardous pursuits exclusions are also included frequently. Frankly, these will often mirror the kinds of hazardous pursuits exclusions that would apply if you disclosed them to an underwriter. But the difference is they apply to all of them, all the time, whether you disclose or not. Simple to underwrite but it places the onus on the client to remember.
Insurers are keen to ensure that they have clearly disclosed how these all work. Here is Sovereign’s guide as an example: Download Simple-life-exclusions-brochure by Sovereign
If you have formed a view that this is a list of the factors most likely to create a claim – and therefore that these are precisely the things you want to be covered for, and want your clients to be covered for, then you might well be right. Such is the price of low or no underwriting. If you want a product with no exclusion whatever then there are many available. The solution is to read the research, fill in the form, take the tests, and get underwritten. The surprising thing about that is how much money you will save.