Insurance policies may exclude payouts

PEOPLE buying insurance policies to protect against loss of earnings if they get seriously ill need to read the fine print to ensure they get their cash payout.

According to the Financial Regulator, insurers’ description of the product as “serious illness cover” may lead some customers to believe all illnesses are covered when this is not the case.

“For example, all forms of cancer may not be covered under every policy. Only illnesses specified in policy terms and conditions are actually covered,” said the regulator’s spokeswoman Jill Forde.

The regulator has written to insurers to remind them of the importance of explaining clearly what illnesses were covered by the policies and which pay out if the holder contracts certain illnesses.

Insurers are also being urged to make sure their advertising is clear and does not mislead consumers.

“Care needs to be taken in advertising and marketing material, particularly where specific examples of illnesses and amounts paid are given, to address the danger that customers may form the impression that all forms of a particular illness arecovered,” said the regulator.

Consumers also needed to abide by the requirement to disclose important facts about their health when applying for serious illness cover. “A major reason for claims being declined is that customers are not disclosing material issues about their health to the insurer,” said the regulator.

“We noted the positiveefforts of insurers to stress the importance of full disclosure and encouraged firms to focus further on this.”

Parents who take out policies and get free cover for their children should be made aware of the restrictions on claims for offspring. “Normally medical information on the child is not required or included on the parent’s proposal form,” said the regulator.

“This can cause difficulties at the claims stage if the child had an illness which existed before the policy was taken out as such illnesses are not actually covered.”

The regulator’s comments follow a survey of how insurers are selling serious illness policies to Irish consumers and how claims are resolved.