The Impact of Disclosures on Insurance Terms

When completing an insurance application, it is important to provide accurate information regarding your health and lifestyle. By default, the initial quote assumes that the applicant is in perfect health and does not engage in any hazardous activities. However, if pre-existing medical conditions or hazardous activities need to be disclosed, the insurer reserves the right to alter the terms of the initial quote.

Premium Rating and Loadings

Upon disclosure, the insurer may choose to increase the monthly premiums, resulting in what is commonly known as a premium rating or loading. Essentially, this adjustment reflects the increased risk associated with the disclosed condition or activity. The severity of the rating or loading can vary significantly depending on the nature of the disclosure.

For instance, in the case of health-related reasons for life insurance, the rating can range from a 25% premium increase up to a staggering 150%. Similarly, for individuals involved in hazardous activities like private aircraft flying, life insurers often raise the annual premiums by approximately £2 per £1,000 of benefit. Consequently, this equates to an additional £16.67 per month for £100,000 worth of coverage.

Policy Exclusions

In certain circumstances, insurers may deem the risk too high to provide coverage even with a substantial premium increase. As a result, they may impose a policy exclusion. Essentially, a policy exclusion signifies that the insurer will not be liable to pay a claim related to the excluded health condition or hazardous activity.

When an exclusion pertains to a health condition, it usually extends beyond the specific condition and may include related conditions. For example, if an exclusion is placed on Multiple Sclerosis, it is common for all diseases of the central nervous system to be excluded as well. In cases where the related conditions are extensive, such as heart disease, insurers may choose to decline coverage altogether.

Similarly, when an exclusion is imposed on a hazardous activity, it means that the insurer will not cover any claims arising from incidents that occur during the pursuit of that activity. It is important to note that just because one insurer has imposed an activity exclusion does not necessarily mean that every insurer would follow suit. There is a possibility that another insurer might accept the risk with a corresponding premium increase.

Seeking Alternatives: Checking with Other Insurers

It is vital to remember that one insurer's decision to impose a rating or exclusion does not dictate the response of all insurers. The underwriting process and subsequent decisions can vary considerably from one insurer to another. Consequently, if you have a disclosure to make or have already received an offer from an insurer with special terms, it is advisable to consult an independent insurance adviser.

An independent insurance adviser can act on your behalf and approach underwriters at multiple insurers to determine if another insurer would be willing to accept the risk on standard terms, considering the initial information provided. While underwriters can offer initial indications of their decision, the final outcome remains uncertain until the insurer receives a fully completed application form and additional evidence, often in the form of GP notes or an additional questionnaire.

Conclusion

In the world of insurance, it is essential to disclose any pre-existing medical conditions or hazardous activities during the application process. Such disclosures can significantly impact the terms of the initial insurance quote, leading to premium ratings, loadings, or policy exclusions. However, it is crucial to remember that insurers differ in their underwriting decisions, and just because one insurer imposes certain terms does not mean that all insurers will follow suit.

To navigate this complex landscape and explore alternative options, seeking the assistance of an independent insurance adviser is highly recommended. By leveraging their expertise and contacts within the industry, you can increase your chances of finding an insurer willing to provide coverage on standard terms, even with pre-existing medical conditions or engagement in hazardous activities.



Remember, insurance is designed to offer protection and peace of mind. By approaching the application process with honesty and seeking professional guidance, you can ensure that you secure the most suitable coverage for your unique circumstances.