Three years ago when David Elliot was told he had a brain tumour, life was never going to be the same again but after a life-saving operation his recovery has been good. Yet he lives with the knowledge that the tumour could re-occur at some stage in the next 10 years. He will also take tablets to reduce his epilepsy for the rest of his life. Mr Elliot, who is now 41, thinks he is the "luckiest man alive" to have survived. But he can no longer obtain life insurance.
Mr Elliot and his wife have a two-year-old son, Jack, and last year they moved from London to Barnsley in Yorkshire. The family remortgaged 95,000 pounds with the Woolwich but David was not able to cover the debt with life insurance of his own. "The Woolwich's underwriters refused to give me life insurance cover. Jayne has life and critical illness cover for the entire mortgage," he says.
The chances of getting life cover are especially unlikely if an application is made during the first three years of having been diagnosed with a nasty type of cancer or having had a heart attack. If the person makes a full recovery within a given period, usually up to five years, companies will consider insuring them again but apply a "loading" on to the policy. In some cases this can be as much as 10 times the premium that others pay.
For example, a male the same age who has a clean bill of health and wants decreasing cover life insurance over 25 years on a mortgage of 95,000 pounds would pay just over 12 pounds per month with Legal & General.
For the first four years after an operation, someone in Mr Elliot's situation would be refused life insurance. After this period, life cover should be obtainable "but at a very high premium". After underwriting, a standard quote of 12 pounds per month could in fact rise to more than 150 pounds per month, although the additional premium wouldn't necessarily last for the whole term of the policy.
Insurers would only start to consider ordinary premiums after approximately ten years post operation and with a full recovery The life company which underwrites for high-risk clients (those who practice extreme sports or with medical conditions) is the Special Risks Bureau (SRB). It claims to have a success rate of 70 per cent when placing its clients with insurers. SRB confirmed that it would be another year before they could consider an application from Mr Elliot.
Premiums would inevitably be heavy because of his epilepsy and because there would still be an increased mortality risk compared to the general population. Unless a policy specifically excluded cancers, Mr Elliot would almost certainly be refused any critical illness cover.
As a result of independent financial advice, the Elliot family has saved up six months emergency money, effectively a self-insurance policy. And there is some good news for David. Alliance & Leicester, his previous mortgage lender, has allowed him to maintain 55,000 pounds of life cover from an existing policy - albeit at a cost of 45 pounds a month. This is called a Guaranteed Insurability Option (GIO) and means the insurance company will allow the insured up to half of the original amount assured without underwriting.
Anyone who needs help with these issues should contact SRB on 01245 491417 or the specialrisksbureau website or the lifesearch website It is not only serious medical complaints that can affect life insurance cover.
Justin Hopwood, media and marketing manager of Gloucester Rugby Club had his initial application declined because of a minor skin complaint. He and his wife are in the process of moving to a new home and they decided to buy life and critical illness insurance as part of the purchase. "I have an unusual condition called Becker's nevus which is nothing more than a slight discolouration of a small patch of skin. I was somewhat surprised when Scottish Provident announced they would not offer me cancer cover," says Mr Hopwood. Numerous visits to doctors and endless phone calls to Scot Prov eventually sorted things out. Mr Hopwood's advice to anyone in the same situation is to make an application early and support it with a full copy of your medical history.
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