Displaying items by tag: application outcome

What's the problem with a 'formal decline' on an application?

Your privacy is extremely important.

Having a formal decline on an application for Life insurance (or a life insurance product) is an important thing to avoid where possible.

  • This is because, for any future insurance application, you would be legally bound to disclose the initial refusal.
  • This is covered in the question that's similar to, 'Have you ever been refused insurance for any reason?'.  Failing to declare this formal decline would give every insurance company grounds to attempt to void any future claims.

So how does this happen?

We see time and time again how people have made an application for life insurance either through a Superannuation fund or some form of questionable online comparison service promising the world. After providing all their personal information to a telemarketer or bank clerk and having to deal with all the disclosure issues that for many people with chronic health conditions is difficult, deeply sensitive and personal, they then are told, they are 'formally declined' and a formal decline record is applied to their insurance history.

They are left believing that 'the decline' was solely due to their health and they are left to deal with the uncertainty and associated feelings that come with being told you're not acceptable.

What they were not originally told, but should have been

What they were not told is that particular brand of insurance provider, bank or comparison websites was probably never able to cater to their particular situation in the first place.

  • It’s like going to a fast-food shop and trying to buy a box of healthy fresh fruit – it’s the wrong shop to go to. 
  • They just don’t sell that solution, but they also didn't tell you that ahead of time.

The problem is not you, the shop never had the ability to ever provide what you wanted anyway.  And they failed to tell you that ahead of time.

The bigger problem then is, how do you deal with a formal decline in your insurance, and what does that mean?

This is why people with chronic health issues need the service of a specialist like unusualrisks.com.au who know where to shop for their clients with unusual risks.

Published in Essentials

So what type of life insurance policies don’t do underwriting upfront?

Usually, those sold by telemarketers and other low grade insurance resellers. Some of the more common life insurance policies sold through telemarketers have the bulk of their underwriting assessment done at claim time. For the uninformed consumer, we say this is dangerous (probably bordering on crazy) because you never really know if you are insured until you have to claim.

  • This means that for the first 5 years you may not be covered for what you expect. (Have a look at the fine print of these policies and see for yourself)
  • It also means that at claim time, if an insurance company were to decide that you were never really eligible for the policy in the first place, they simply won’t pay out the claim and might simply refund the premiums paid to that date.
  • The risk to you of not understanding the fine print is particularly significant.

Where is the peace of mind with this type of policy you ask? Yep, we’re still looking for that ourselves. Without the assistance of a speciality risk adviser from unusualrisks.com.au you’re totally on your own. And who will be there for you and your loved ones at claim time? A different telemarketer this time perhaps?

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What does it mean when a policy is fully underwritten upfront?

Peace of mind. The degree of risk is assessed and the application completed at the time you make the actual application, not when you need to make a claim.  Having a professional policy that's fully underwritten upfront ensures all the assessments by the insurance company are completed so you (or your family) don't have nasty surprises at claim time.

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So why do people buy telemarketed insurance policies?

Usually, because they don’t know what you now know or they're really time poor and happy to take the view, 'something is better than nothing'.

Having a speciality Risk Adviser like unusualrisks.com.au looking out for you and your loved one's interests means you would never be exposed to such a risk.

  • At unUsual Risks Insured, we're on record as boldly stating to all insurance companies, “Stop selling rubbish to good people!"

Those companies that continue to do so, cite commercial decisions. We believe, they find an advantage in hoping people will not read the fine print or have not got a professional adviser looking out for them.

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What’s the risk with Telemarketer sold Life Insurance?

The cautionary phrase, 'Let the buyer beware,' perhaps applies more than ever in this space.

  • Directly sold life insurance is often explained as a 'watered-down life insurance product' usually sold through telemarketers direct to a consumer, without the assistance or advice of a Financial Adviser, Risk Insurance Adviser or Financial Planner.

Telemarketer directly sold insurance products are typically more expensive when compared to fully underwritten high-quality life insurance products. This is because direct products are designed with limited or no underwriting assessments so the insurance company is taking a greater risk, and charge you to cover it.

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What’s the possible outcome of an application for insurance?

There are usually 3 outcomes that an application for insurance can have.

  1. Accepted – this is where an insurance policy is offered on standard terms for you to review and accept. (This is the best-case scenario).
  2. Loaded or Excluded – where an insurance policy is offered on non-standard terms eg: premiums are increased due to risk or specified conditions are excluded eg: covering all issues except a re-occurrence of a pre-existing back I injury etc. (This is still a good case scenario as it means you can still get cover).
  3. Declined - a decline decision can also mean that the life company doesn't have enough information at this stage to reach a decision. This might happen if your GP has recommended you see a Specialist about an issue, and you haven’t yet seen the Specialist ( so the usual information is not yet available). In this situation, your medical information is considered 'not yet complete' so a final underwriting decision cannot be made until the information is complete So the application is declined.

Insiders tip: Be aware all Insurance policies that are offered with non-standard or amended terms of cover or conditions usually have to be accepted within 21 days. (This is because a person's health can change over time).

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What does the phrase subject to underwriting mean on an insurance quotation?

When we provide an insurance quote, it's a projection, dependent upon the final underwriting process completing successfully.

  • When we start the process we try to provide a quote projection based upon the information you have supplied to date on a worst case scenario.
  • After we get the opportunity to review your medical situation in detail, we then work back to a best case scenario that is usually cheaper too.

A pre-assessment involves two steps

  • Quoting is the first step 
  • Underwriting is the final step in the assessment and includes a careful review of any medical reports.

After the formal underwriting process is completed, you might receive a revised quote depending upon your medical history.

It might take longer than expected, but the process delivers a fully underwritten policy that provides peace of mind that all assessments decisions have been completed and you know exactly where you stand.

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What does it cost to apply for life insurance?

Nothing. The cost of applying for life insurance is included in the policy premium.  

  • You don’t pay for anything until you have a policy in your hands and you're sure it’s what you want to put in force.
  • We also have a 30 day cooling-off period for all Life Insurance contracts so that if you change your mind, you are not disadvantaged.

You might be interested to know that it usually takes an insurance company three to seven years before they begin to make a profit from a policy. We use technology to make sure that the only people that start the application process are those with the very best chance of success.

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What does a Life insurance application look like?

A typical application is made up of two sections.

  • Part 1 The Basic Questions like who you are, your type of occupation and whether you have special travel or pastimes that have a higher risk eg: do you take regular treks to the Himalayan mountains every year or do you race vintage motorbikes etc.
  • Part 2 The Personal Health Questions There are approximately 30 - 40 health-related questions to complete.

Today where possible we use online and over the phone options to complete Life insurance applications so the whole process becomes easier and more private.

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How long does the formal Life Insurance application take?

About 20 – 30 minutes depending upon the level of detail needed. But you can help and collect the results of your blood work ahead of time, that will speed up the process.  And by authorising us to use that information in a formal application, the application process becomes super fast.

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