Things to Watch Out For When Purchasing Critical Illness Insurance

Article published on 22nd July 2008

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The Financial Services Authority (FSA) has said that insurers need to make sure that all customers disclose all relevant medical information prior to finalising the purchase of a critical illness insurance (CII) policy.

The FSA found that insurers often did not do enough to make sure that all customers understood exactly what they needed to disclose to their insurance company and what the risks of failing to do so might be (an unsuccessful claim, for instance). With some insurance companies the FSA found that over 25% of CII claims were rejected, with half of those being due to a lack of proper disclosure before purchasing the policy.

The FSA also found that consumers tend to find critical illness insurance policies difficult products to understand and are understandably dissatisfied when, because of what the customer views as a 'technicality', their policy does not provide them with benefits when they are injured or seriously ill. Even so, the FSA found that the quality of explanations by advisers of critical illness insurance as a product and the illnesses and conditions it covered was still reasonably poor in many cases.

From 2006 insurers were required to make all documentation clearer. For example, the FSA stated that key features documents often did not set out the benefits and key limitations and exclusions under the policy clearly enough.

So be sure you understand fully what you are getting into before you purchase this sort of insurance. Never be afraid to ask question several times if you feel you need to. There is no point in purchasing an expensive product if you don't get the use from it that you think you will.

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