Asteron Life Mortgage and Living Cover
Finance regulator says insurers are next for tough talk

Assessing the value of a condition covered, versus not covered

So a client has a health condition, and it is covered under their current insurance, but would not be covered under a new one (we're not talking about conditions that are loaded). How do you compare the two?

If you don't take the cover on the pre-existing condition into account the comparison isn't valid. That's not just my view, its shared by other insurance people too (such as these folk). It is possible to do a comparison, but you must attempt to include an allowance for the change in cover scope, including allowing for the condition that would be excluded.

Another good way to look at this is to consider the value of specific items in QPR, if the excluded condition fits neatly with a rated item, or group of items, then the weighted value of that item is at least a starting point for discussing the value of the coverage that they have. Take the cluster of items that relates to heart conditions, for a male life that's a fair chunk of the value of a trauma policy (it is a much smaller proportion for women) and would be hard to argue that the switch would be worth it - even on those numbers. But those numbers are only a starting point, because the condition is obviously so significant that the insurer feels that this is not a normal insured-population risk (which QPR strives to use in weighting) but a far more serious risk, so serious, in fact that it must be excluded. That  gives us a clue about the long-run effect of that claim. Chances are that the insurer the client is with now, would not take the case if they had the opportunity to contemplate the risk at new business.

In effect, the advice discussion isn't about comparing cover, as such, but terminating cover. This has become advice on disposal, in the case of conditions not covered. I think it should be explicitly be dealt with in that way. For small items, where the other gains in cover or savings in premium are large, this can be justified - after all, most people, rationally cancel their cover in the end. But for significant conditions where the reasons for cover are still present it would be difficult to prove the value of terminating cover for the item in consideration.


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