Today marks World Suicide Prevention Day, when we acknowledge the tragedy of the many lives lost over the past year and consider what actions we can take to reduce these numbers.
Every life lost is a tragedy and the lives of remaining family members and friends are changed forever. When you lose someone who is important to you in this way you have to find a way to go on, a way to survive and move forwards and it is not easy.
But what about those who have made an attempt on their own lives and then survived? They also are faced with challenges, coming to terms with what has happened and the journey to rebuild their self esteem. It’s a journey of recovery and that’s not easy either.
For the life insurance industry the issue of how to deal with a suicide attempt/s has been problematic. We know that life policies in the UK carry a 12 month self inflicted death exclusion and this is applied universally to all policies. The idea behind this is to discourage those taking out the policy with an intention to take their life, so this exclusion is sensible and has a good purpose.
But the real issue for insurers has been what happens after month 12 because from that point on they are fully exposed to the risk of an early claim. This is why insurers sometimes decline applications where there has been an attempt to take ones life, especially so if that attempt has happened in recent years.
What about those who are trying to recover from a previous attempt, who make an application for life insurance only to have it declined? If they have a partner, a family, a mortgage they still have the need for life insurance and most of these people will die of natural causes just like everyone else.
Based on our experience of dealing with such clients in general, they do not expect insurers to cover them for a future claim for self inflicted death. But here’s the important bit. They do expect insurers to cover them for death due to cancer or a heart issue or any other physical health condition that they have not had at the time of application and which they are most likely to die from. Yet when they receive a decline decision it is a decline for death from all causes. Unsurprisingly, this has led to many negative national press articles about life insurers over past years, in which they claim insurers are not fair and they don’t care.
The good news is that it has been possible with some careful thought and attention to build a solution. The plan, developed with Royal London by Moneysworth, Cura and The Insurance Surgery, manages to bridge the interests of the insurer and the applicant in such a way to achieve an acceptable outcome for both parties. The plan works by underwriting on a traditional basis first (with a 12 months exclusion) but if this results in a decline or postpone decision then the client gets a second bite of the cherry as the case is then considered using a long term exclusion instead.
Since the plan was developed a couple of years ago the results have been impressive, resulting in a success rate of about 80% for clients who would otherwise have been declined or who have already been declined elsewhere. Because the single biggest risk is removed, terms can be offered at more reasonable ratings which are affordable. The take up rate of terms offered is very high with clients accepting terms in nearly all cases.
Some readers might find this article technically interesting from an underwriting point of view but for those affected it is a very important and personal issue and the solution means they can now access life insurance to protect their families.