LV= has revealed the details behind two claims it declined to illustrate to advisers the importance of ensuring their clients take cover when healthy and fully divulging any conditions at application.
The insurer said that by being transparent and sharing examples of declined claims, it hoped it was clear to see why these decisions had been made.
And it also published a three-point checklist for advisers to ensure they could put their clients in the best position to be protected.
“We believe it’s equally important for protection providers to talk about the claims we can’t pay as well as the ones we do,” LV= said, addressing advisers in its Protection Pays report.
“Last year we were unable to pay 5% of protection claims due to reasons like misrepresentation, fraud and not meeting the definition required to claim.
“We know nobody wants to be in this position – you, your client or our claims assessors who have to deliver this distressing news.
“We want your client to be able to feel confident that they’re protected and can rely on their policy to pay and support them when they need it the most,”
Misrepresented medical evidence
In the first case, the customer died two years into the policy due to liver cancer as a result of Hepatitis B.
LV= said their medical records showed they had been diagnosed with Hepatitis B prior to taking out the policy and had been under treatment for many years. This was not declared on the application and it was unable to pay the claim.
“If this had been disclosed on the application we would not have been able to offer cover. This meant we had to decline the claim altogether,” LV= said.
In the second case, the customer died three months after taking out a policy but the medical evidence showed he had attended his GP three days before applying for cover.
LV= said he had told the doctor he was smoking 20 cigarettes per week and had symptoms including stomach pain and weight loss. The GP advised he would need further tests and depending on the results further investigations.
However, it noted the answers on the application did not indicate any health concerns.
“If this was declared at application we would have postponed a decision until the tests and further investigations were complete. We made the decision to not pay the claim in light of this,” LV= said.
Tips for advisers
Alongside the case studies, the provider offered three quick tips to advisers to help them support clients in their application. These were:
- Make sure your client is aware of the impacts that their application can have later on. In your conversations emphasise the importance of disclosing all information requested and check and run through their application with them. As part of your process record that you have had this conversation.
- If you’re unsure use a pre-underwriting tool to see if the client can be covered and under what terms before submitting a full application.
- When your client receives their policy conditions check with them that they’re confident in checking them to understand what’s covered through their policy.
“Declining a claim isn’t a decision we take lightly and where the outcome is unclear we have a forum in place to make a ruling decision,” LV= continued.
“We might decide to fully pay a claim, provide a partial payment or in some cases fully decline the claim at all.
“Sadly, we know many people in this position have desperately sought cover because they are worried about the future after receiving a lifechanging diagnosis or health scare.
“That’s why it’s important to emphasise the importance of taking out cover while your client is healthy, so when they are in this position they are able to count on their cover,” the insurer concluded.