Critical illness after having cancer

Thanks for your question @, I’m glad to hear your treatment has completed, best of luck for your results.

You usually only need to make a life insurance company aware of a diagnosis if you have a renewable policy and they ask you for updated medical information. Most policies are based on the medical history that was given at the start of the policy.

Some policies include a benefit which allows the policyholder to ‘buy back’ the life assurance element of a joint life and critical illness policy even after a critical illness claim has been made. This effectively allows the reinstatement of the life cover element of the policy. This option can be a more cost-effective way of getting life assurance, as well as providing cover which may be difficult to get elsewhere.

Please note that there is usually a time limit to exercise this option after the initial claim and a death as a result of the illness that was claimed for under the critical illness element of the policy may not be covered.

Check policy documents or ask the insurer if this is included. I’ve provided some more information below which I think may also be useful for you to be aware of.

Getting life assurance after a cancer diagnosis

A cancer diagnosis is likely to make getting life cover harder and usually will mean they consider your application much more carefully. This can be affected by the severity of the diagnosis and the length of time that’s passed.

As insurance is based on risk, it may be that an insurance company simply doesn’t offer cover. However, sometimes it just means you have to pay more for the policy or they agree to review the application at a later date after a certain amount of time has passed.

Sometimes, an insurer might agree to offer life assurance, but with an exclusion for a pre-existing medical condition (like cancer). Before agreeing to an exclusion, think about the implications of not having cover for that particular illness.

It’s always worth checking to see if you have a life insurance policy with your employer, often known as “Death in Service”, usually a multiple of your salary. These insurance policies are paid for by employers and often won’t require any medical evidence.

If cover is refused, it may be worth speaking to an Independent Financial Adviser who will be able to search the whole of the insurance market. Maybe check with family and friends to see if they can recommend an adviser. You can also find details of local advisors here.

When choosing a financial adviser, always check that they, and the company they work for, are authorised by the Financial Conduct Authority (FCA) to provide financial advice. You can view the register here.

Please be aware that, if an unregulated firm (or individual) is used, there may be no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.

Please note that in providing this information, Macmillan cannot give advice about life assurance, cannot guarantee that an individual will be able to obtain cover and does not endorse any specific life assurance company or product.

Guaranteed Underwriting Life Policies

Another type of life insurance is a “Guaranteed Underwriting Life Policy”. These offer a limited amount of life insurance cover to those usually aged 50 or over. Although, some companies do offer this type of cover to people over 40 and in some rare cases over 30.

With this type of policy acceptance is guaranteed, but some health questions may be asked to help determine how much you pay.

It’s important to remember that these policies usually do not pay out for death claims in the first 12 or 24 months after the start of the policy. This is known as the ‘deferred period’. If death occurs within this time, normally any monthly premiums that have been paid are returned rather than the insured amount being paid out.

Some companies include a terminal illness benefit as part of their policy terms. This means the insured amount may be paid on a diagnosis where life expectancy is expected to be less than twelve months.

Some policies also offer the option to make a payment directly to a funeral director on death, in return for a slightly higher pay-out. This is sometimes called a ‘funeral benefit option’.

Putting a policy in Trust

An area that’s often overlooked when organising life assurance is the arranging of a suitable ‘trust’. By using a trust, the policy holder can ensure that in the event of their death, the life assurance policy is paid out faster to their chosen beneficiary – usually a spouse, partner or children. The advantage of this is that the money can be distributed without having to wait for the rest of the estate to be sorted out (a process that can sometimes take months to complete).

Insurance companies can often arrange a suitable trust at no extra cost.

James

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