UK: The 'whole truth' needed to save claims catastrophe

Non-disclosure relating to Multiple Sclerosis (MS), anxiety and depression, and smoking is the most common cause of a fraught life assurance claim, according to Norwich Union Life.

IFAs can play a crucial role in helping clients avoid the trauma of having a claim declined because insurers did not have all the facts.

Tony Jupp, Norwich Union Life’s chief underwriter, says: “People need to know upfront the potential consequences of not disclosing details at proposal stage and the start of the process is where an IFA’s advice needs to be the most frank and effective."

He adds: “When it comes to applying for life assurance, people’s ability to tell the ‘whole truth’ can be compromised by a mixture of embarrassment, not wanting to face the facts of an illness and trying to read their own meanings into what the insurer wants to know. We have found that issues concerning MS, anxiety and depression, and smoking cause the most problems at claims stage.

“In the case of those who claim for MS, some fail to disclose neurological symptoms* from earlier in their lives which would have had some bearing on the underwriting decision. Anxiety and depression can carry such a stigma in some people’s minds that clients may be uncomfortable discussing them in front of an IFA or their spouse; and smokers who fail to disclose their habit – perhaps fearing a higher premium – don’t seem to appreciate the problems this would cause them and their family if they make a claim.

“So, it is vital that the Financial Adviser ensures clients do not make judgements about their personal history, but simply fill in the form as honestly and accurately as possible. This might need some skilful diplomacy in assessing which questions the client would prefer to answer in private, and which the advisor needs to probe and clarify in person. However, it is ultimately the responsibility of the client to decide how they answer the questions on any application form.

“Life assurance is too important for people and their families to jeopardise receiving its full benefits. We want it to offer our customers the benefits and security that comes with valid cover and this is why full disclosure is absolutely vital.”

Norwich Union has introduced a factsheet for customers highlighting the importance of completing insurance application forms accurately.

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*For example - history of numbness or loss of sensation, dizziness, blurred or double vision.

For further information, please contact:
Suzanne Judge or Ailish Hanna at Staniforth on 0161 919 8495 
Louise Soulsby at Norwich Union Life on 01904 452617/07800 699526

Notes to editors: