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Why do life offices punish the sensible?

When you get ill (not just with man or woman flu), it’s the smart thing to do to go your GP to get checked out. Men are notoriously worse at doing this than women, but maybe they’re actually the smart ones!

One thing I have learnt is that sometimes it doesn’t pay to see your GP. In fact, it costs you….. in higher life and CIC premiums, as well as wild exclusions in the policy that cover so much it makes you wonder why you bothered.

The story of Joe and his left arm

Here’s an example. A number of years ago a man (let’s call him Joe) experiences a strange tingling and numbness to his left arm. Being a sensible bloke, Joe went off to his doctor to ensure his arm wasn’t about to fall off. Joe was tested for the likely causes and saw a specialist and everything that could be scary was ruled out. The tingling and numbness disappeared of its own accord and Joe continued merrily on his way.

Move forward a few years and Joe applies for Life Insurance with CIC. He dutifully fills out the application form with all required information including that of his trip to the GP a few years earlier. Not surprisingly, the life office request his medical records and the Chief Medical Officer takes a look. They come back with “computer says no” – or at least “we’ll cover you but we will apply a huge exclusion to your policy because of the mystery illness you had”.

Joe asked why the exclusion applied given that nothing was diagnosed. Apparently that was the point – as there was no diagnosis, the life office didn’t know what was wrong with him so they had to put a rather large exclusion on his policy. It made some sort of sense so Joe decided to pay to see a specialist as well as have a private MRI scan to prove all was fine. The results came back saying that there was absolutely nothing wrong with Joe. Other tests were performed and blood taken but all results were negative. Happy days.

So Joe goes back to the life office with evidence (specialist report, blood tests, MRI scan results) showing there is nothing wrong with him and his arm is normal.

Joe’s Catch 22

You would think that would be enough….. but no…. As there is still no diagnosis, then the exclusion has to stay. Catch 22 – Joe has had many tests and more than one MRI all of which are clear. The specialist has stated there is nothing wrong with him. So there never will be a diagnosis, because there’s nothing to diagnose. So how do you get the exclusion removed? The life office won’t remove the exclusion without knowing what had been wrong with him years before. As far as Joe is aware, no-one has yet invented time travel. The life office couldn’t tell him what to do. They didn’t admit the craziness of it all. So the exclusion remains. There is nothing that Joe can do. He now has no option but to have a life insurance policy with CIC that has a far-reaching exclusion that he will never be able to do anything about. It doesn’t exactly provide the peace of mind that such a policy should provide for his family.

Crazy lesson

The lesson is – if there’s something wrong with you, don’t see your GP. Ignore it and it might go away, or it might not. Regardless, if you apply for Life cover and/or CIC, you’ll probably have no issues because you ignored the potentially life-threatening illness you had. You may be slowly dying of something but as you haven’t had the sense to see your doctor about it nobody knows there’s anything wrong so they’ll cover you with no exclusions. So if something does happen to you your policy will pay out. Not like Joe who acted sensibly by seeing his GP and will now be punished for being fit and healthy as proven by his tests and MRI scans. If he gets ill, his policy may not pay out.

How can that be allowed to happen?

Do you come across such madness with your clients?

Do you have any pointers for those who have to live (and hopefully not die or get seriously ill with) crazy exclusions on their policies that are impossible to get rid of?

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