But clearer policies could soon be here. The Office of Fair Trading has called on the industry to reform or face regulation by the Financial Services Authority.
An OFT report demands that insurers agree a set of core terms and products. By standardising the medical definitions and adding "must have" elements, customers can compare products on a like-for-like basis. Labelling will also apply to income replacement and lump sum critical illness policies.
The OFT wants the final proposals in place by the end of September. OFT director general John Bridgeman issued the recommendations after saying that insurers' response to his 1996 report on medical insurance had been "dismal". But one main recommendation in the first report - that insurers should drop "moratoria" underwriting - has been removed. A moratorium clause allows an insurer to accept customers without a full medical being carried out.
A moratorium automatically excludes cover for any conditions the customer has suffered in the previous five years. If he or she does not seek treatment for these conditions for two years after taking out the policy, they will be covered in future. This differs from traditional policies, where customers have to give full details of medical histories and will never be covered for pre-existing conditions.
The advantage of full medical underwriting is that you have a list of what is included and excluded. Moratorium underwriting offers no such list and customers can get a nasty shock when they claim.
How medical policies should change
q Industry-wide definitions of standard medical terms, and "benchmarked" policies with core products which must be included, should be introduced. This applies to income replacement and critical illness policies as well as private medical insurance.
q Clear explanations of the two different types of underwriting for medical insurance, and how this affects cover for any conditions you have suffered in the past, should be given.
q Insurers should show how medical insurance premiums have increased in the past and make it clear that they usually increase with age.Reuse content