Posted May 26, 2021
At Watts Mortgage and Wealth Management we have spent many years now developing a deep understanding of medical conditions that clients may present with, and how differing insurers will respond and underwrite the conditions. When a client comes to us for advice and we are aware of the condition, its impact upon an individual, and the typical treatment pathways clients are invariably reassured that they are speaking with a good quality adviser who will be well placed to look after them.
Over the years we have looked after thousands of clients presenting with a broad range of conditions, from the more common ones such as high blood pressure, type 2 diabetes and elevated BMI, to the much less common, and (to us at least), more interesting cases. In the last few weeks, we have placed life insurance for a client with a Schwannoma (a generally benign tumour of the nerve sheath), a case of Porocarcinoma (a very rare type of skin cancer) and Ehlers-Danlos syndrome (a rare group of conditions affecting connective tissue). It is unusual for us now to take a call relating to a condition we have not yet encountered, but when we do we take it as a learning opportunity to find out as much as we can about it. The benefits of having a specialist adviser to effect the best client outcome are readily apparent in a large number of the cases that we advise upon.
When, as advisors, we source life cover, it is tempting to apply for the cheapest policy, but this is rarely the best advice when a client has a pre-existing medical condition. There can be a huge difference between one insurer and another with respect to the end terms offered, with responses very often ranging from flat declines, to large increases in premium and/or exclusions, to sometimes absolutely standard terms.
As a good example of this difference in underwriting, and the huge impact it can have upon a client’s experience and end terms I thought it may be useful to consider a case that we have successfully placed at Watts Mortgage and Wealth Management. Due to the impact upon underwriting by Co-Vid and the larger number of declines/postponements we are seeing in the industry at this time I have opted to look at a case of early stage cervical cancer from before the pandemic.
There are around 3000 new cases of cervical cancer detected in the UK every year, with rates being relatively low due to the three-yearly screening being offered to all women between age 25-50 (dropping to 5 yearly subsequently). There are over 100 types of cervical cancer, but most cases are caused by the Human Papillomavirus (HPV), of which 70% are type specific strains, HPV16 and HPV 18.
As with all cancers, the earlier this condition is detected and treated the better the outcome, with 5-year survival rates for stage 1 cervical cancer ranging between 80-99%, whereas stage 4 having a much lower rate at around 20%.
Cancers are divided into staging and grading, and getting this information from a client is crucial in gaining an accurate pre-sales underwriting decision. Perhaps the biggest indicator with relation to both the prognosis for the client and the accessibility of life cover is how early the cancer was detected and treated.
The earliest stage- stage one cervical cancer- is sub-divided into stage 1a and 1b which differentiates the size of the cancer only. All stage one cervical cancers are still located purely within the cervix and have not spread to lymph nodes or any other organs. The stages are then subdivided as such:
Stage1a1- the cancer is below 3mm in size
Stage1a2- the cancer is between 3-5mm
Stage 1b1- the cancer is between 5mm-2cm
Stage 1b2- the cancer is between 2-4cm
Stage 1b3- the cancer is over 4cm but again is still purely located within the cerxix.
The size of the cervical cancer will determine the treatment required. The smallest of these can be treated with a large loop excision (LLETZ) and/or a cone biopsy, with above that needing more extensive surgery and very likely radio and chemotherapy.
An adviser will need to gain as much information at the outset as possible to be able to speak with pre-sales underwriters and get an accurate depiction of the most likely end terms being offered. This will include:
Date of diagnosis
The histology- the staging and grading of the cancer
Size of the cancer if available
Was it HPV positive/negative
Treatments required- LLETZ, cone biopsy, hysterectomy, radiotherapy, chemotherapy.
Date of last primary treatment
Is the client still under regular review/follow up
The more accurate and precise the information provided the better the indication of terms that will be gained- this is crucial as underwriting a condition such as this may take many weeks to gather GP reports and consultants letter etc, so placing the cover with the best insurer initially will save any lengthy delays in re-applying elsewhere.
Life, critical illness and income protection will all be looked at in differing ways by underwriters depending upon the condition that is being presented to them. Whilst for some conditions life cover will be the easiest to place (for Diabetes as example), it does not typically involve any exclusions, so for other conditions this can be more difficult to place. The ability for critical illness and income protection to ring-fence certain conditions and exclude them can be useful at times, although cover with a cancer exclusion can never be regarded as good scenario.
With this specific case were trying to source life and critical illness cover to protect a large mortgage for a lady in her mid-thirties. The client in question had been found with an abnormal smear test whilst pregnant and had to wait some difficult months to deliver her baby until she could be safely treated. This lady then had a procedure called an LLETZ, followed by a cone biopsy with clear margins. The histology of the cancer was a stage 1a1 and was found to be HPV negative. Due to the very early stage and size of this tumour there was no subsequent need to any chemo or radiotherapy. Luckily this lady was a GP and was able to provide me with a high level of information relating to the histology etc, making pre-sales underwriting a relatively straight forward task. Typical experience is that clients will be more unsure of the detail. Knowing what information you need to gather before calling underwriters, and getting this together from the clients, whether they ask their GP or get copies of consultants’ letters etc will really help with this process.
When we spoke to the presales underwriters there was a very large difference between one provider and another, a sample of which below clearly illustrates:
|Company||Initial Premium||Underwriters Response||End Terms as offered by Underwriter.|
|Legal and General||£184.64||+50% Rating on critical Illness||£258.77|
|Royal London||£216.64||Permanent Cancer Exclusion irrespective of timescale||Not Pursued any further|
|AIG||£226.79||Cervical Cancer Exclusion upon critical illness||£226.79|
|Aviva||£218.68||Standard Rates- if any chemo or radiotherapy then a +50% rating applied||£218.68|
It is not unusual to see advisers starting with the cheapest product provider, which if all things were equal would not be a bad idea. However, as can clearly be seen from the various responses given, the cheapest provider actually in this instance ends up offering the most expensive terms overall. If an adviser had certain favourite critical illness providers- AIG and Royal London both had very good quality contracts at that point in time- again the terms would have ranged from a total cancer exclusion (absolutely not acceptable to a client) to a permanent cervical cancer exclusion (again far from ideal). Zurich here were the most flexible here with their underwriting, closely followed by Aviva who provided standard terms providing the client had not required any chemo or radiotherapy.
With this case in question we sat down with the client at the end of the process and discussed options to move forwards with. We talked through the differences in the Zurich and Aviva critical illness plans as they were at that point in time, and the client decided to proceed with Aviva.
This case study is a good example of when a client can give clear and detailed information prior to researching and making those pre-sales calls. Knowing the questions to ask gave us some very firm indications from the insurers and enabled us to get a fantastic outcome for the client who was very concerned she was going to be permanently precluded from accessing critical illness cover.
There is lots of talk in the financial press around ‘signposting’ at the moment, that meaning advisers who do not offer protection advice find a reliable company to refer clients to and still have the conversation. Finding a reliable third party to look after your clients and give them very highest-level advice is more important than ever, especially with the impact of Co-Vid19 making underwriting even more difficult than it would ordinarily be. What we have found over recent years is having a team of pure protection specialists, as opposed to our mortgage advisers or investment/pension advisers writing protection business has dramatically improved upon client outcomes at every level, from the fit and well who want an adviser who can advise them very precisely upon a critical illness plan, to the more complicated corporate/shareholder cases, and most importantly to those clients who are unlucky enough to have a less than perfect medical history who need help accessing cover that they may otherwise be denied. This focus upon helping the less healthy and most in need clients, we believe, should be at the cornerstone of our industry to make sure that every client, no matter the case size, has the very best chance of accessing life insurance.
Watts Mortgage & Wealth Management