Few professional financial advisors would disagree that protection insurance cover should be the core of most peoples financial planning whether it be guarding against the detriment of premature death, long term illness, accident or (particularly now with the arrival of the credit crunch) cover for unemployment.

Life insurance is rightly the foundation of financial preparation whether it be used to insure your mortgage or provide a tax free lump sum for your dependants in the event of your demise. Unhappily, some other kinds of protection insurance have a less desirable status. Payment Protection insurance has a name for being miss-sold and critical illness insurance has historically suffered from uncontrolled policy exclusions which enabled the insurers to reject an extremely large number of claims, even if they seemed genuine.

But over the last few weeks a gleam of light appeared when Scottish Provident gave out its 1st 1/2 figures on the resulteffect of claims on its critical illness cover. These numbers appear to imply that at last the question of unintended disclosure of health particulars when the policy application is concluded, is being resolved.

Only a few years ago mortgage insurance claims were being routinely turned down on the merest hint that the client had omitted any minor medical detail – even a foot infection or a sore throat! In line with the figures issued by Scottish Provident, their claim refusals have come down sharply from 6.5% last year to 1.3 per cent in the last six months.

Why is this? Scottish Provident, Scottish Equitable, Axa, Friends Provident, Norwich Union and LV  have introduced a variety of changes intended to decrease their refusal rates. They start with an utterly obvious explanation of the importance of full medical disclosure right down to when they last visited their Doctor no matter how slight the cause. And some insurance companies such as Friends Provident get a medically trained person to phone each potential client to talk through their health history in detail. Then when the insurance policy goes on risk, some insurance companies are reminding the policyholders of the requirement of full medical disclosure and allowing them the chance of adding or correcting the details on their submission form.

If the additional details are considered as increasing the insurer’s risk, then the insurer will inevitably increase the monthly payment – but that is for sure far better than paying the previous payment for years and years and then having a claim rejected.

The insurers should have taken course a long time ago as their slowly, slowly method has damaged the public’s opinion of protection insurance cover. After all there is an definite need for life insurance so let us pray that it achieves the reputation its so correctly warrants.

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