Bad news from the doctor; worse news from the insurer

A diagnosis of cancer doesn't mean an automatic payout. But a new type of policy is set to change that, writes Kate Hughes

Being diagnosed with cancer is a serious blow. One in three of us will receive the news at some stage in our lives and it is no surprise that a recent study by the healthcare provider Bupa identified the disease as the biggest health worry of most Britons.

In such circumstances, you would expect your health insurance policy to pay up immediately, leaving you to focus on getting better. But you could be in for a nasty shock.

Advances in medical science mean many cancer patients make a complete recovery, and some cases are not even considered serious. But many health and life insurance policies will pay out only for life-threatening or terminal conditions.

"People often have no idea that they may not receive any money when they get bad news," warns Peter Chadborn, an independent financial adviser with the advisory firm CBK. "Because they've been diagnosed with something serious, they think they can tick a box and claim, but it's not that simple.

"Be careful," he adds, "that you don't focus on cost alone when it comes to [taking out insurance]. You need to be sure that the private medical or critical illness policy you have paid for will pay out when you need it to."

Critical illness cover pays you a lump sum on the diagnosis of a specific condition, while private health/ medical insurance can improve the speed and quality of treatment you receive. For example, it may give you access to appropriate licensed drugs which may not be available on the NHS.

"Around 16 per cent of claims on protection policies fail," says Matt Morris from the independent financial advice firm LifeSearch. "Of those, at least half are rejected because they don't meet the definition of a severe illness."

For example, if you are diagnosed with a slow-growing, localised cancer, such as non-aggressive skin cancer, your insurance claim may not be settled because it is not considered life threatening. In fact, more people fail to receive a payout because their condition is not severe enough than because they have failed to mention something relevant on their application form, such as a pre-existing medical condition.

"If the illness or disease is severe, the policy should pay out," adds Mr Morris, "But there are some cancers that sound bad but are treatable. That means you probably won't get any money from traditional policies."

But insurance companies are now beginning to introduce policies offering a full or partial payout depending on just how ill you are, in contrast to the usual all-or-nothing approach.

For example, Prudential's alternative critical illness policy, PruProtect, pays out depending on the severity of the illness and the hardship it could cause, if, say, you have to give up work for a period. And unlike other critical illness plans, the policy is not void once a claim has been made, although any initial payout can reduce subsequent ones significantly. The ability to claim more than once is particularly important if a claimant is diagnosed with a stage-one or stage-two cancer which then becomes more severe.

Earlier this year, the insurance industry agreed to put its house in order over its handling of the controversial issue of customer non-disclosure. In the past, claims were routinely turned down if a customer had previously failed to disclose personal details the insurer deemed important. Now, though, under a new agreement brokered by the Association of British Insurers, claims affected by non-disclosure are more likely to end in a full or partial payout rather than being refused altogether.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Day In a Page

    The difference between America and Israel? There isn’t one

    The difference between America and Israel? There isn’t one

    Netanyahu knows he can get away with anything in America, says Robert Fisk
    Families clubbing together to build their own affordable accommodation

    Do It Yourself approach to securing a new house

    Community land trusts marking a new trend for taking the initiative away from developers
    Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

    David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

    The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
    With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

    Money, corruption and drugs

    The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
    America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

    150 years after it was outlawed...

    ... America's first slavery museum is established in Louisiana
    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
    Tony Oursler on exploring our uneasy relationship with technology with his new show

    You won't believe your eyes

    Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
    Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

    Moores must go. He should never have been brought back to fail again

    The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
    Yvette Cooper: We can't lose the election. There's too much on the line

    Yvette Cooper: We can't lose the election. There's too much on the line

    The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
    A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

    It's not easy being Green

    After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
    Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

    Gorillas nearly missed

    BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
    Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

    The Downton Abbey effect

    Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
    China's wild panda numbers have increased by 17% since 2003, new census reveals

    China's wild panda numbers on the up

    New census reveals 17% since 2003