Critical Illness Insurance, Know Your Rights

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Article published on 21st July 2008

In 2006 the Financial Services Authority (FSA) carried out a review of the sales of critical illness insurance (CII) policies as part of several thematic projects looking at the advice and information being given to retail customers when they buy financial products. They carried out this review because of concerns they identified following a review of critical illness insurance documentation and financial promotions from insurers.

The report was interested in finding out to what extent insurance companies selling CII complying with the FSAs existing rules and, more generally, treating their customers fairly during the sales process.

Although insurers selling Critical Illness policies were acknowledged as having made efforts to meet standards laid down by the FSA, there were concerns that insurers needed to do more to show they that they are treating their customers with the fairness due them.

The review found that most sales of Critical Illness Insurance were made to customers taking out a mortgage, offering them cover if they contract an illness are then unable to meet mortgage repayments. Unlike some other protection policies, the review identified that many sales of Critical Illness Insurance are made on an advised basis following an assessment of the individual customer's financial needs.

We will be looking at some of the findings of the FSA over the next few articles, both in terms of where they are excelling and where customers need to be more aware.

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