Support from advisers during the application stage can lead to fewer declined protection claims, LV has said.
According to LV’s ‘Fuel for Life’ report, the insurer paid out 94 per cent of protection claims in 2023. Out of the 6 per cent that weren’t paid, three out of four had to be declined due to misrepresentation.
LV explained that, while protection can be a lifeline in cases of valid claims, when information has been misrepresented at application stage, this often leaves insurers in the position of having to deny claims.
This misrepresentation can either be innocent misrepresentation, when a client doesn’t disclose relevant information because they were not aware of it, and careless misrepresentation, when they leave out information because they forgot or didn’t think it was relevant.
There is also deliberate or reckless misrepresentation, when a client deliberately chooses not to disclose relevant information with the intention of misrepresenting their health, such as a medical diagnosis they were fully aware of.
LV protection sales and marketing director, Mike Farrell, said: “At LV, we want to be there for all our customers to offer crucial support during life events.
“Sadly, although only a small percentage of claims are declined, most of our declined protection claims could have been avoided if the right information was provided to us during the application stage.
“The latest issue of LV Fuel for Life examines how advisers can help clients in answering underwriting questions accurately with real examples of misinterpretation and declined claims.”
Farrell added that LV encourages advisers to ensure that people applying for protection cover understand the impact that non-disclosure can have on invalidating their policy.
“While discussing sensitive personal information is uncomfortable for many, it is important to be transparent and always share medical history so that advisers and insurance providers can easily find the best cover for them,” he added.
LV’s Wealth and Wellbeing Research Programme previously found that clients had misconceptions about the claims process and what claim may be declined.
This could have an impact on their ability to answer underwriting questions correctly and may lead to deliberate misrepresentation.
While the data showed that rejection is the exception, not the rule, 56 per cent of respondents said think insurers don’t want to pay claims.
Additionally, when asked, 15 per cent of UK consumers would never feel comfortable disclosing their health conditions when answering protection insurance questions.
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
