Risk Clinic: PMI moratorium underwriting

I do few PMI sales and want to cover my back with a business client. They are a wealthy couple in their 50s and both have had heart attacks. Obviously their PMI cost is high but they are looking at moratorium underwriting to alleviate this. Am I right to be concerned, even though I’ve explained it to them?

Susie Colley, West Country healthcare

Great care must be taken in considering a private policy for these clients.
They will undoubtedly be on medication and therefore their cardio vascular systems will not be covered and he must emphasise this in the ‘reasons why’ section.

It is laudable that this broker wishes to help his client but with complex medical issues like this, only those brokers who have considerable medical experience should advise such clients. The moratorium plan cost will be no different to a fully medically underwritten (FMU) one.

However, the main difference will be that with FMU the cardiac condition will be a clearly written exclusion, whereas with the moratorium the condition is subject to the rules of the plan.

The broker must take extreme care to explain that with a moratorium plan whatever condition was diagnosed, or suffered from, in the five years prior to taking out the plan will be initially excluded.

In addition, the moratorium states that for the next two years the client must not take any medication, receive any advice (which would include checkups) or receive any treatment.

Suffice to say that the likelihood of them ever being able to obey the rules of the moratorium are slim, so this policy is obviously unsuitable for the cardiac condition.
Age is the extenuating factor regarding the high premiums so the viability of a private policy must be carefully considered.

A wise broker may suggest that they put the money into a savings account and draw it down when required; his client may respect him more for his honesty.

David Priestley, PruHealth

It is essential to give clients the underwriting options available to them when they have known pre-existing conditions. For previously uninsured individuals, PruHealth offers two underwriting options – FMU and moratorium underwriting.

With FMU, new customers complete an application form and provide details about their medical history and that of any insured dependants prior to joining.
This information and any additional information supplied by their GP is assessed by our medical underwriters.

Medical conditions they had in the past that are likely to need treatment in the future are not covered and are shown on their certificate of insurance.
With the moratorium, new customers do not have to answer any health questions on their application form.