There is a significant case for the industry to make big changes to terminal illness policies, writes Richard James
As stated previously, predictions of survival past three months bear very little relationship to the actual survival of those who are terminally ill. Increasing the survival period to, say, 24 months or longer will probably serve only to add to the consultant's dilemma and the patient's confusion.
We could learn from how marketing critical illness products by the number of conditions has led to consumer (and adviser) confusion. Competing on length of survival period within the terminal illnessdefinition is unlikely to be in the claimants' best interests either and inconsistency of wordings across the market will no doubt add to the policy holder's confusion.
If insurers were to move to a three-month survival period, there could be pushback, because fewer claims would be paid and coverage would seem inferior. However, this approach may create a much closer alignment between the insurer and medical profession, hopefully resulting in far fewer disputes.
Consultants could assess against a more realistic criteria, and there would be greater certainty for the claimant. In addition, in keeping with the original intent of critical illness, financial support could then be focused on those truly critical (ie, those with terminal illnesses
in a rapid phase of deterioration).
While three months may appear to be the clearest survival period to use, the industry could look more widely at other interactions that claimants are having at the time of a terminal illness. This supports the earlier point of engaging
with relevant charities.
Special rules
The Department for Work and Pensions (DWP) provides financial support under ‘special rules' for those who are suffering from a progressive disease where death can be reasonably expected within six months.
The consultant can complete a DS1500 report on behalf of the patient, and the DWP would assess the patient's entitlement.
If approved, the normal qualifying period for benefits such as Attendance Allowance, Personal Independence Payment or Employment and Support Allowance would be waived and there would be no need to prove the level of care required.
In future, we would be well advised to design benefits that align with existing procedures for claimants to demonstrate awareness and empathy. If the industry is to address the issues of terminal illness, it could also be timely to review the existence of the exclusion at the end of the policy term, typically 12 or 18 months.
To the consumer, and even more so to the claimant, there is possibly little understanding as to why this exists. It is likely that these types of exclusions lead the public to believe insurers hide behind their small print and look for ways to avoid paying claims.
The current terminal illness definition does appear to be fundamentally flawed. As BBC Watchdog highlighted, many claimants are not being treated fairly at their time of need.
With charities taking the lead by being assertive and successful in influencing policy change, the opportunity exists now for the industry to proactively make changes to the terminal illness definition, rather than be forced to change as a reaction to further criticism.
Richard James is a business developer at Munich Re
