Use disclosure grid to understand your policy
From Tuesday, all life assurance companies that sell dread disease cover will have to provide you, as a potential policyholder, with a standardised disclosure grid that shows how their policies pay out at four different levels of the four main severe illnesses.
The Association for Savings & Investment drew up the grid to help you compare severe illness cover across policies on the four main dread diseases: stroke, cancer, coronary artery heart bypass and heart attack.
Life assurers have to provide the grid in their marketing material and on their websites only to people who buy new policies from September 1. By April next year, the grid must be used in quotes and contracts.
There is no obligation to provide the grid to existing policyholders, but you can look up the grid that applies to your policy (if the policy is still being sold) because this will help you to understand the cover you have.
It is very important that you are aware of the percentages at which your policy will pay out for each level of a severe illness, as well as the debates over the different payout levels.
And remember that the payout level – along with a host of other issues – will affect the premium you pay.
Any other illnesses the policy covers will affect the premium and this cover could be very valuable – particularly if you are at risk of contracting a less common illness that runs in your family.
The cost of the cover will also be affected by any guarantees on the level of the premium increases, the ability to reinstate cover after a claim, and whether or not the benefits are standalone or are combined with other forms of cover, such as life and disability.
The issues are complex and you may need a qualified financial adviser to guide you through them.