Simon Taylor explains how insurers view family history when underwriting life and critical illness policies
Family history has, in recent years, become a major factor for underwriters assessing any application for protection. With the success of IFAs selling the concept of total protection and greater awareness from the customer, there has been a much higher take-up of the additional benefits. This particularly applies to critical illness (CI) cover where family history can be even more important than the client's own medical history.
This is often a bitter pill to swallow. Why should someone be penalised for a condition which they themselves have not suffered? It is an understandable reaction, but studies have shown a family history of certain conditions, in particular if diagnosed at a premature age, statistically present an above average risk for the applicant.
Specific conditions which are proven to be inherited present implications for the offspring or siblings of affected family members. The inherited nature of certain conditions continues to become clearer as the human genome project develops and underwriting decisions will continue to be shaped by its findings.
The underwriter will carefully assess a proposer's family history to try and determine if this might present any additional risk. Of particular interest is a strong family history of coronary heart disease, for example, heart attack, angina or stroke. More than one family member with diabetes increases the risk for the applicant to develop the condition. Certain cancers such as breast, ovarian or colon will influence the terms offered and particular neurological conditions such as Huntington's Chorea and multiple sclerosis will likewise potentially lead to rated terms. Other conditions such as polycystic disease of the kidneys are also relevant.
Coronary heart disease
Family members having suffered from events such as heart attack, stroke or angina prior to age 60 must be considered an adverse risk. The earlier the age at diagnosis and the more family members that are affected, the greater the significance of the family history.
There could be a familiar type of high cholesterol involved and the underwriter may decide to obtain a doctor's report to see if cholesterol levels have been tested, or even ask the applicant to undergo a medical with a blood test to check fasting lipid levels. The risk would be increased if the proposer is overweight, smokes or has high blood pressure. Even if the proposer is a non-smoker of normal height and weight with normal cholesterol levels and blood pressure, this does not completely rule out the family history as presenting an above average risk.
There are unidentified, intangible elements peculiar to family history that make it a risk factor in its own right, although the family history would have to be a particularly adverse one to attract a loading if all other risk factors were demonstrated as being normal.
Cancer
The relevance for a female of an early incidence of breast cancer in her mother or sister ' an early incidence would be diagnosis before age 50 ' carries implications for her own risk, increasing it above that of the general population. This risk is then further increased if the BRCA gene is present and, in some cases, can often lead to elective removal of healthy breasts to reduce the risk of occurrence ' an agonising choice for those who test gene positive.
Where there is a history of one family member diagnosed before the age of 50 and the applicant herself is under 50, a loading of 50% would be applied to the CI cover, although some insurers may be able to offer an alternative of the loading or to exclude breast cancer from the cover and charge ordinary rates. If the applicant is over 50 at the time of proposal, then the risk reverts to ordinary rates and no special terms are applied. More than one family member affected would lead to more severe terms.
There is a directly inherited form of cancer of the colon called familial adenomatous polyposis, which will affect half the children of an affected parent. Regular screening of family members by colonoscopy should take place from teenage years until the age of 35 to 40 by which time the likelihood of the disease developing is considered minimal. Provided regular screening is undertaken and negative, life cover can be offered at ordinary rates. CI would either be declined, or an exclusion would be applied in respect of colon cancer or even cancer altogether.
Non-familial colon cancer in the family history still presents an above average risk if the incidence occurs before the age of 60 and the proposer is under 45. Screening is now quite common among this group. A 50% loading would be applied to the critical illness, or as an alternative, cancer of the colon or rectum could be excluded. If the proposer is over 45, normal rates would be offered. More than one family member affected would lead to more severe terms.
Ovarian cancer has strong links with breast cancer also and a family history is relevant for the underwriter. If the female applicant is aged below 40 and one family member has been diagnosed before the age of 50, a loading of 150% would be applied to the CI cover. If the age at diagnosis were between 50 and 64, the rating would be 50%; if the diagnosis was at age 65 or greater, standard rates would apply. If the applicant was aged 41 to 50, the ratings would be 100% if the relative were diagnosed before the age of 50 and standard rates would apply if diagnosis was made after the age of 50. If the applicant is aged 50 or over standard rates would apply (if one family member was affected) for CI only.
For life cover standard rates would also apply to one family member, but the age at diagnosis would not be taken into account when applying the loading. A family history of two or more members having suffered ovarian cancer would need individual consideration for both life and CI cover.
Exclusions are not normally possible with ovarian cancer due to links with breast cancer.
Neurological conditions
Huntington's Chorea is a degenerative brain condition causing progressive dementia, usually between the ages of 30 and 50. Half the children of an affected parent can be expected to inherit the gene. Genetic testing is available, but given the implications of a positive test it is not surprising some choose not to take it. If there has been a negative genetic test, normal rates can usually be offered. If there has been no testing then life cover would be significantly rated if the applicant were aged 21 to 35. Ratings would reduce if aged 36 to 45, reduce again if aged 46 to 55, but would not revert to standard rates until the applicant was over 55.
CI cover would be declined if the applicant was under 50, a 100% loading would be applied from age 51 to 55 and again standard rates could be offered if over age 55.
A family history of multiple sclerosis would depend on the age and, importantly, the sex of the applicant and which parent or sibling was affected and at what age they were diagnosed. A female applicant with any first degree relative (mother, father or sibling) diagnosed before the age of 50 would have multiple sclerosis excluded from the CI cover, if the diagnosis was after the age of 50, cover would be at standard rates. A male applicant would have the same exclusion if the diagnosis was in his father or sibling, but interestingly if his mother was affected, there is statistically lower risk and no exclusion would be needed.
Polycystic disease of the kidneys
This is again an inherited disorder where multiple cysts form in the kidneys at the expense of healthy kidney tissue, leading to progressive deterioration in kidney function which can result in hypertension, kidney failure, stroke and heart attack. Those with a family history should be regularly screened with scans to check whether cysts are forming. Genetic testing can also be performed, if this has been done, and is negative, normal rates will apply.
Applying for cover
Clearly there are many factors and variables that influence the underwriter's decision when assessing family history. The better the detail on the proposal form, the more informed a decision the underwriter can make and this is where the IFA can help enormously.
When completing the proposal, family history should be as specific as possible. If there is a family history of cancer then the type, for example lung, breast and so on and age at diagnosis should be specified.
Rather than disclose 'father had heart disease age 36,' be more specific: was it a heart attack or a valve replacement? Valve replacements are often due to structural disease which does not carry any familial risk and this will help the underwriter come up with an informed decision, rather than possibly inconvenience the proposer by sending them for an unnecessary cholesterol test. If the father suffered a heart attack age 45 but smoked 40 cigarettes a day and weighed 22 stone, then the risk factors for the proposer are reduced by the underwriter being made aware of this information.
IFAs may find it useful to use an underwriting helpline to discuss a family history with an underwriter, if they wish to obtain advice regarding the likely terms.
Simon Taylor is a senior underwriter with Scottish Equitable Protect
