Drewberry Insurance: Never Blindly Accept a Life Insurance Premium Rating

LONDON, Feb. 22, 2011 /PRNewswire/ -- Drewberry Insurance encourages individuals looking for the best life insurance deal who have medical conditions or participate in hazardous activities to seek financial advice as premium risk loadings vary wildly from insurer-to-insurer.

When gaining life insurance quotes online, such as for mortgage life insurance, the premiums returned assume that the applicant does not have any pre-existing medical conditions or participate in any hazardous activities, such as diving, climbing or private aviation.

In this instance, the premiums quoted online can be very misleading and often end up being significantly higher after the application has been underwritten by the insurer. Unless the applicant can honestly go through the entire application ticking 'no' to all the health and lifestyle questions then financial advice from an insurance adviser really needs to be sought.

Advisers can speak directly to the underwriters at various insurers to see what their likely underwriting decision would be; this can significantly impact on the best choice of insurer for the client. As underwriting decisions vary so wildly between insurers, individuals could save hundreds, if not thousands, over the life of the policy by applying to the insurer offering the most favourable terms.

The following are real life examples from Drewberry Insurance clients of likely pre-application underwriting outcomes given a medical condition or the pursuit of a hazardous activity*:

Health Example One: Polycystic Ovary Syndrome (PCOS)

This applicant was seeking mortgage life insurance with critical illness cover. PCOS is believed to affect around 5 to 10 per cent of women of reproductive age and is one of the most common causes of female sub-fertility.

For very mild cases some insurers can offer standard rates with no premium increase whereas other insurers would increase the premiums by a minimum of 50 per cent. As PCOS is also associated with obesity each insurer's Body Mass Index (BMI) cut-off point will need to be considered, along with blood pressure and cholesterol readings. Thus, by applying to the right insurer the applicant could save at least 50 per cent on their premiums.

Health Example Two: Multiple Sclerosis (MS)

This applicant was looking for life insurance only. MS affects the ability of nerve cells in the brain and spinal cord to communicate with each other and can lower life expectancy by 5 to 10 years.

For progressive Multiple Sclerosis all insurers would likely decline cover. However, for milder cases, termed as relapsing remitting MS, terms can usually be obtained. For the mildest cases nearly all insurers would increase the monthly premiums by 50 per cent, whereas a few insurers would increase the premiums by a minimum of 75 per cent. In this case, applying to the wrong insurer could cost an extra 25 per cent in premiums.

Activities Example: Recreational Helicopter Flying

This applicant was seeking life cover only and flew a light-weight helicopter for less than 10 hours per annum. The likely underwriting decision for any type of private aviation will depend on a number of factors; such has flying hours, type of aircraft and pilot qualifications.

Only one of the main UK insurers was willing to offer standard rates, whereas the strictest insurer stated that they would increase the monthly premiums by 24 pence per 1,000 pounds of cover, which equates to an extra 24 pounds per month for 100,000 pounds worth of life cover.

In a separate example of an applicant who flew an unpowered glider one insurer was willing to offer standard life insurance premiums for up to 100 hours flying per annum, whereas some other insurers would increase the annual premiums by 1 pound per 1,000 pounds of cover even for one hour of flying per annum.

Tom Conner, head of mortgage protection insurance at Drewberry notes, "With so much variation in underwriting decisions between insurers it can be a very expensive mistake not seeking advice.

"Whether it is a medical condition or a hazardous activity it is not uncommon for a 100 per cent premium loading to be imposed with one insurer and no loading whatsoever with another insurer.

"The key is to speak to someone who is independent so they can seek likely underwriting decisions from all the main insurers before deciding which insurer represents the best bet in terms of obtaining the lowest premiums."

Notes to editors

*Likely underwriting outcomes are only indicative based on the information collected during a client fact find, which is then passed on to the underwriters at each respective insurer. Final underwriting decisions would need to be made in accordance with a fully completed application and further medical information/evidence.

For more information on insurance premium loadings and exclusions please see: http://www.drewberrymortgageinsurance.co.uk/insurance-premium-loadings-exclusions/

About Drewberry Insurance

Drewberry Insurance is a trading name of Drewberry Ltd, which operates as a whole of market insurance intermediary in the health and protection insurance markets. Drewberry Insurance offer insurance broking services for a range of individual and group insurance policies.

On the personal insurance side of the business Drewberry provides advice on individual health insurance, family health insurance, mortgage protection cover, life insurance, mortgage life insurance, income protection cover and critical illness insurance.

On the group insurance side of the business Drewberry provides advice on group health insurance, group life insurance, group income protection and group critical illness cover.

Drewberry Ltd is an appointed representative of Chase Templeton Ltd which is authorised and regulated by the Financial Services Authority, register number 311612. Registered address: Vantage House, 1 Weir Road, London, SW19 8UX.

SOURCE Drewberry Insurance