Protection is bought on the assumption that it will pay. It is worth knowing what that actually involves — partly so it is less daunting if the day comes, and partly because almost everything that stops a claim being paid happens at the application, years earlier.
How a claim runs
- 01You tell the insurer
A phone call or an online form. Your adviser can do this with you or for you, and it is worth ringing us first — we hold the policy details and we have been through it before. There is no cost, and no reason to do it alone.
- 02The insurer sends a claim form
It asks what has happened, when, and for permission to approach your doctor or your employer. On a death claim it is completed by the executor or the beneficiary.
- 03Medical evidence
For critical illness and income protection the insurer writes to your GP or consultant. This is usually the longest part, and the delay is almost always the medical practice rather than the insurer.
- 04Assessment
The insurer checks the claim against the policy definition. On critical illness that means the precise wording of the listed condition; on income protection it means the incapacity definition and the deferred period.
- 05Payment
Life and critical illness pay a lump sum. Income protection begins a monthly payment once the deferred period has run, and continues while the claim definition is met. Family income benefit pays a regular sum for the rest of the policy term.
Why claims get declined
The condition was not the one covered
Critical illness policies pay on the conditions named in the policy, at the severity described. A serious illness that is not on the list, or that has not reached the stated severity, is not a claim. This is why the definitions matter more than the premium.
Something was not disclosed at application
The largest single cause. A symptom you had not had investigated, a consultation you forgot, a units-per-week figure that was optimistic. If it would have changed the insurer’s decision, the claim can be affected years later.
It fell inside an exclusion
Many policies exclude certain claim types in the first year, and a policy may carry specific exclusions applied at underwriting because of your history. These are set out at the start and are worth reading then.
The definition of incapacity was not met
On income protection, a policy that pays only when you cannot do any job at all is a very different thing from one that pays when you cannot do your own. The wording is chosen when the policy is set up.
Everything that protects a future claim happens at the application. Disclose everything, including the things you are sure are irrelevant. An insurer that knows about something can price it or exclude it; an insurer that finds out at claim stage can do neither.
Two things worth doing now
- •Put life cover in trust. It generally means the money reaches the right people faster, without waiting for probate, and outside your estate for inheritance tax. It costs nothing to set up at the outset and is considerably harder to sort out later.
- •Tell somebody the policies exist. Insurers pay out on claims they are told about. Whoever would be making the claim should know who the insurer is and where the paperwork lives. A note with your will is enough.
And if a claim is declined
Ask for the decision in writing with the reason. Insurers have a formal complaints process and must respond within set timescales. If you are not satisfied with the outcome you can take it to the Financial Ombudsman Service, free of charge.
Tell us either way. We would rather help with a claim we cannot win than hear about it afterwards.