This page contains information about our general approach to complaints about critical illness cover for financial businesses. If you’re looking for information specifically in relation to Covid-19, please look at our dedicated page that contains information for financial businesses about complaints in relation to Covid-19.
As a minimum, critical illness insurance must cover:
- heart attacks
The Association of British Insurers' (ABI) guide to minimum standards for critical illness cover contains the list of illnesses that critical illness insurance should cover. Definitions of different critical illnesses are generally standardised across the industry.
However, the exact number and type of other illnesses covered depends on the particular policy.
Critical illness insurance can be taken out either as a stand-alone product or as part of another insurance policy, such as:
- term assurance (life cover)
- decreasing term assurance
- endowment plans
- whole-of-life policies
Because it can be taken out to protect a mortgage, it's often set up in joint names.
Types of complaints we see
Most of the complaints we see about critical illness insurance involve:
- issues about how the policy was sold - for example, whether the product was fairly and accurately described in the marketing materials
- the way the insurer has assessed a claim - for example, its decision about whether the illness in question is covered
- the insurer alleging that the consumer didn't disclose certain information
- poor customer service - for example, a delay in the insurer paying a claim
Complaints we can't look at
We can generally only consider complaints about advising or arranging contracts of insurance if the event being complained about happened on or after 14 January 2005.
So we might not be able to look at complaints about the advice given at the time of sale or maladministration by an independent financial adviser (IFA) if the policy was taken out before this date.
However, if the policy contains an investment element (like a 'surrender value'), we might still be able to look at it. This is because our powers over arranging or advising on investments began on 1 December 2001.
This is a complicated area, so we will look carefully at the circumstances of each case before we start out investigation.
What we look at and how to handle complaints
In February 2019, the ABI updated their guide to minimum standards for critical illness insurance, replacing the previous statement. This guide is to help consumers understand and compare policies by standardising:
- the way critical illness insurance is described to consumers when it's sold
- the definitions of generic terms used in policies - for example, 'occupation' and 'permanent'
- model descriptions of how illnesses are defined, and how exclusions are phrased
When considering a complaint, we'll look at whether you followed best practice in line with the guide that applied at the time the insurance was taken out.
The ABI website has more information on their guide to minimum standards for critical illness cover and its previous statements of best practice.
Some insurers may offer terminal illness benefit under critical illness insurance, to provide protection for the consumer, in the event of being diagnosed with a terminal illness. An illness is usually considered terminal if the disease is incurable and the person won't survive for more than 12 months.
Terminal illness benefit and critical illness insurance can't both be paid together because they are lump sum payments. Once a payment is made, the policy ends.
Many of the cases we see involve an insurer alleging non-disclosure on the part of a consumer.
Find out more about complaints about non-disclosure.
A consumer might tell us they’re ‘critically’ ill, but their medical condition isn’t listed in the core or additional conditions covered by the policy. We’d need to see medical evidence to make a decision about whether the insurer should pay the claim.
We’d normally favour evidence from a specialist consultant over the consumer’s GP or an occupational physician. Especially if they’ve assessed the consumer’s medical condition against the definition of the policy.
Sometimes, different specialists are involved at different stages of a consumer’s illness, and their opinions about the condition could differ. For example, a surgeon’s opinion may be based on the success of the surgery and post-operative recovery, whereas a consultant might take a different view about the long-term management of the condition.
Our role isn’t to decide which specialist is right, or to make medical judgements. We can only decide whether there’s strong medical evidence to show the consumer has a certain condition that’s covered by the policy.
Occasionally, we might think an independent medical examination is needed. We generally ask the business to pay for this, although it will depend on the individual circumstances of the case.
Total and permanent disability insurance pays out when someone is totally and permanently disabled and unable to work. It’s usually provided as part of critical illness insurance as additional cover for illnesses that aren’t specifically listed.
For a claim to be paid, the consumer must be totally and permanently disabled. Depending on the conditions of the particular policy, they must also be unable to perform:
- their own occupation
- any suited occupation – based on their previous work and qualifications
- any occupation – taking no account of previous work or qualifications
A consumer’s disability can also be measured against activities of daily living (ADLs) or activities of daily work (ADWs), which will be set out in the policy.
The meaning of 'permanent' disability
To show their condition is ‘permanent’, the consumer needs to provide medical evidence that they’ve undergone a significant amount of treatment and/or investigations, and that there’s no reasonable cure for their disability.
We’ll consider whether the evidence suggests that it’s more likely than not that the disability will never improve.
If there are other recognised treatments that could result in a cure, we’ll consider whether it’s reasonable to expect the consumer to undergo the treatment. If a treatment is non-invasive or involves only minor surgery, we’re more likely to say it’s reasonable for you to ask your customer to agree to it.
But a customer can’t be forced to undergo serious or invasive surgery to prove that they have a valid claim. And for some disabilities, such as back conditions, surgery isn’t guaranteed to resolve the problem, and could make it worse.
Where a claim has been rejected because the customer hasn’t agreed to surgery, we’ll consider the nature of the condition and procedure to decide whether this outcome is fair.
Some insurers also include the word ‘irreversible’ in the policy definition of a disability. This is to help the insurer establish whether the consumer’s disability is permanent – as part of its review of all the treatment the consumer has received and any that might still be available.
Again, if the only remaining option is major surgery, we’ll carefully consider the consumer’s reasons for saying they won’t undergo it.
The meaning of 'total' disability
‘Total’ disability generally means the consumer is totally disabled from performing the material and substantial duties – but not all of the duties – of:
- their own occupation
- suited occupation
- any occupation (depending on the wording of the policy)
We often receive complaints about whether a business has reasonably interpreted the word ‘total’.
In some cases, ‘total disability’ is measured against the activities of daily living (ADLs). When making a claim, the consumer will need to provide evidence that they’re totally disabled from carrying out a number of daily activities. For example, eating, washing and dressing. It’s difficult to prove this and we see many complaints involving unsuccessful claims.
But we’ll take a reasonable approach. For example, we might agree that a consumer isn’t totally disabled from performing three out of six ADLs. But we might still decide that they meet the policy’s definition of disability, because they’re significantly disabled from performing all of the ADLs.
If the consumer is on a rehabilitation programme, we can consider the opinion of the person/specialist delivering this. We’ll also consider the effect of any prescribed medication on the consumer’s level of disability. For example, with medication, a consumer may be able to carry out daily activities for several hours without pain.
If you provide us with video footage of the consumer, we’ll check you’ve given the consumer an opportunity to watch and comment on the footage. We might find that the footage conflicts with other evidence. For example, from the consumer’s treating consultant. We’d recommend the footage is shown to the consultant for their medical opinion on whether the activities shown are inconsistent with the level of disability being claimed for.
Once this has happened, we’ll decide whether we think the footage suggests that the consumer’s actual level of ability is different to the level they’ve stated. However, we’ll bear in mind that the consumer may have only brief moments of ability. So we’ll look at what period the evidence covers and consider all the individual circumstances of the case.
We’ll also consider whether the activity shown is relevant to the conditions of the policy in question. For example, the consumer may be seen watering their garden, but that doesn’t necessarily mean they’re capable of carrying out their own occupation as a bricklayer.
There’s more information about the various definitions of disability in our guidance on income protection.
When a claim has been rejected, we often see complaints involving issues around how the policy was sold. For example, if the consumer says they weren't made aware of a specific condition of the cover when it was sold. We look at all available evidence, including both sides' accounts of the sales process and pre-sale documentation.
Illnesses that aren't covered
We see complaints where a consumer is diagnosed with an illness that isn’t covered by their policy. They might complain that if they’d known the illness wasn’t covered, they’d have taken out a policy with another insurer. However, the fact that an illness isn’t covered doesn’t automatically mean that it was wrong to sell it to them.
We’ll carefully consider the consumer’s circumstances and decide whether the policy was suitable.
Cancelling cover and getting a replacement
Some consumers say they were advised to cancel their critical illness insurance and take out a replacement. However, they’ve found that although the original policy covered the illness they’ve claimed for, the replacement doesn’t.
In these cases, we’ll consider whether the consumer was fully aware of the change in the level of cover and the reason for the policy change. A cheaper premium alone isn’t normally a good enough reason for restricting cover. And we’re unlikely to agree that cancelling an existing policy is suitable advice – particularly if the consumer is older and it’s potentially more likely that their health will deteriorate.
The policy was an extra product sold with life assurance
Critical illness insurance is sometimes sold alongside life assurance. However, we hear from consumers who feel that they weren’t told that critical illness insurance was optional, or that they didn’t want it. We’ll look at the sales documentation to decide what we think the consumer’s priorities were at the time of sale.
There’s more information about our general approach in these situations in our guidance on complaints about misrepresentation and non-disclosure.
Putting things right
If we decide your customer's illness falls within the policy's definition of a listed critical illness or permanent and total disability, we usually tell you to pay the claim with interest.
If we think evidence suggests that the policy was mis-sold, we might tell you to cancel the policy and refund the premiums with interest. We might also tell you to reinstate an earlier policy that was cancelled and pay any claim the consumer has made under it. This would include subtracting any premiums the consumer would have paid towards the policy if it hadn't been cancelled.
We generally tell a business to pay interest at 8% simple per year from the date that claim should have been paid (or in the case of a refund, from the date the consumer made payment) until the date that payment is actually made to the consumer. The date on which the claim should have been paid will depend on the terms of the policy.
A critical illness insurance claim can be paid either from the date the medical condition is diagnosed or after a set period of time has elapsed after diagnosis (for example, 14 or 28 days - depending on the policy terms).
In some circumstances, we might decide that interest should be awarded from the date the business would have met the claim had it been notified earlier. For example, the consumer may have been critically ill and unable to make a claim for some time after diagnosis.
Sometimes we decide the business had enough evidence to pay a claim when it was first submitted, but didn’t. In these cases, we may tell the business to pay the consumer compensation to reflect the wider impact of their delaying the payment.
There is more information about our approach to this type of compensation in our guidance on compensation for distress and inconvenience.
Find out more about compensation.
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