‘Cancer is cancer . . . I had no idea that mine wasn’t covered
TENS of thousands of people with long-standing financial protection policies are being urged to check they are still fit for purpose – and upgrade them if not. The warning comes from palliative care nurse Maureen McShea, who recently found her insurance did not cover the cancer she was diagnosed with late last year.
She had to undergo a mastectomy, but was shocked to learn her cancer was not covered by the critical illness policy she took out in 2001. If she had taken out the same insurance with the same insurer ten years later, it would have been covered.
‘I had no idea that certain cancers were excluded from my policy,’ says Maureen, 66. ‘In my job I see the awful impact of cancer on people’s lives every single day. It is heart breaking.
‘In my eyes, cancer is cancer. It is a serious and critical illness. The loss of my right breast was nothing but traumatic and psychologically scarring. Obviously insurers view it differently.’
Maureen adds: ‘I believe the policy I paid £56 a month for was not worth the paper it was written on. I have been pouring hardearned money down a drain into the bank account of my insurer.’
Critical illness cover is designed to pay out a tax-free lump sum if a policyholder falls victim to a serious illness. When it was first sold in the UK, 34 years ago, it covered five main conditions: cancer, heart attack, stroke, multiple sclerosis and blindness.
Over the years, the cover has evolved. Policies sold today tend to be more consumer-friendly than those marketed in the 1990s and early 2000s. The main providers include Aviva, Legal & General, Zurich and Royal London. But cover is not cheap, with premiums determined by your age and whether you smoke.
For example, a 25-year-old nonsmoker can expect to pay £13 a month for £100,000 of cover, which includes life insurance and lasts 25 years. The premium stays constant, but the sum covered decreases to zero over the term. This is usually done to dovetail with the amount owed on a repayment mortgage, as cover is usually arranged at the same time as a home loan.
If you start later, you pay more, as your chance of becoming ill rises. A 45-year-old non-smoker would pay £57 a month for £100,000 of cover. A smoker the same age would pay £99.
Maureen, from Inverkip, Renfrewshire, took out her £70,000 critical illness and life policy in 2001, when she bought her home with husband John. The cover was sold by a firm called Life Policies Direct, now dissolved.
It was only late last year that she had reason to dig out the policy documents when a routine medical revealed she had Paget’s Disease – cancer of the nipple – and ductal cancer in situ, which was treated by a mastectomy.
Maureen contacted her insurer Aviva to make a claim, assuming she would receive a payout of £12,000 – the current value of the cover. But she was shocked to find her cancer was not covered. This is because it was in situ and non-invasive – a form of cancer excluded under policy terms. Aviva says it reviewed Maureen’s medical records in ‘considerable detail’ to ensure no evidence of an invasive condition that would have triggered a successful claim. But the histology report confirmed that ‘invasive malignancy was not present’.
Stunned by the news, she took her case to the Financial Ombudsman Service – an organisation that arbitrates in financial disputes – only for it to be rejected.
Though Maureen has now given up hope of receiving a penny from Aviva, she does not want anyone else to suffer such disappointment, especially after traumatic surgery. She says: ‘Get your cover checked and, if it is lacking, upgrade it.’
Her point is valid. If she had bought the same cover from Aviva ten years later, she would have received a partial payment. This is because nearly all insurers now pay out if in situ breast cancer is diagnosed, resulting in a mastectomy, lumpectomy or a ‘wide local excision’.
Typically, payments are limited to the lower of £25,000 or 25 per cent of the sum assured.
AVIVA says long-term policies such as critical illness cover have terms and conditions set at the start and cannot be changed. In some cases, it says, this can protect consumers as it means cover cannot be diminished halfway through. But it also means, as in Maureen’s case, that new illnesses cannot be added to a policy. The only way for policyholders to escape proscriptive policies is to buy a new policy, though it will probably mean paying a higher premium.
Alan Lakey is a protection insurance expert at Highclere Financial Services in Hemel Hempstead, Hertfordshire. He says: ‘The purchase of critical illness cover should be viewed along the lines of buying a car. You don’t hold on to it until it is a rust bucket. Equally do not expect protection cover to serve your best interests until it expires. Newer policies will come along that provide better value for money.’
A financial adviser can ensure you have suitable cover, but only if they specialise in protection insurance.
Leading specialist advisers include Highclere, Cavendish Ware Wealth Management, LifeSearch and Vita.