The Life Insurance Industry Faces a Call for More Transparency

Monday, February 15, 2010

When entering into any contract, one of the most important requirements from the agreement is clarity and transparency. It would seem as though this is a pretty realistic expectation when it comes to any purchase let alone a long-term financial commitment, such as life insurance. Until recently, life insurers have had more or less free reign when it comes to the clauses within their policies.

There has recently been a move by the Association of British Insurers to change the very nature of critical illness policies. These new policy guidelines seek to disallow the automatic inclusion of permanent disability clauses in the underwriting process. What this seeks to do is, in effect; reduce the number of refused claims.

The Association of British Insurers has the intent to provide greater consumer responsibility through clarity and transparency to its policy holders. The study by the ABI took into account 1,000 total permanent disability (TPD) claims and discovered that approximately half were made on musculoskeletal and mental health issues. What this new scheme purports to be able to achieve is establish once and for all what exactly is eligible for payout.

There are also moves bound in with this exclusion transparency policy to take another look at cancer exclusions. This is something that will hopefully help a wide range of families when it comes to dealing with such a problem. We, as consumers, should at least be able to understand what exactly it is that we are buying. The provisions from life insurance providers are have been and are typically varied and most are extremely comprehensive. A little clarity, however, will go a long way to boosting the industry from both provider and consumer perspectives.


Marcus Taylor