If your clients have risky occupations or specific health requirements, you may find they fall into the adverse or unusual risk category.
Determining whether or not someone fits into this category is the adviser’s first port of call.
Emma Thomson, life office relations director at LifeSearch, says: “Unusual or adverse risk will apply to anyone not underwritten on standard terms, because they are deemed to be more likely to make a claim due to their health, occupation or status.”
However, the phrase ‘unusual risks’ is something insurer Aviva avoids.
Andy Doran, protection underwriting philosophy manager for Aviva, explains: “We don’t use this in protection.
“There are applicants who follow certain occupations or participate in certain pastimes that we see less commonly, but each customer who applies to Aviva is underwritten based on the risk they specifically present, taking into account their medical history, lifestyle, occupation, travel and pastimes.”
Paul Reed, director at Vita, says the term ‘unusual risk’ would probably be lost on some consumers and possibly cause offence to others if they were described either as ‘unusual’ or a ‘risk’.
Mr Reed says: “The question could be posed whether or not advisers and insurers explain the reason for such terms and the possible outcome as a result.”
Sadly, as Mr Reed says, many customers still “hold the belief they are uninsurable because of a health or lifestyle disclosure. They may say ‘I can’t get insurance because I work in the armed forces’, or ‘I can’t get life insurance because I have diabetes’.
“These may have been historic reasons but insurers’ guidelines have tried to align products to changes in consumer behaviour or developments in medical treatment.”
Indeed, as Ms Thomson says: “They will be accepted but charged a higher premium to cover that risk, or be accepted but have the issue in question excluded, so will be unable to make a claim on the element that poses the highest risk.
“For example, someone with a history of back pain might be accepted with a ‘back exclusion’, so they would be covered for everything except a back-related injury.”
But our experts say there may be the odd occasion where cover has been declined if the risk is deemed too great.
For example, if someone has asthma and is a heavy smoker, but works in a mine, this may be a toxic cocktail of risk that would be too much for most insurers to underwrite.
However, there may be ways to help the person improve their lifestyle and reapply using an adviser to help get insurance.
Moreover, the issue of wider, more flexible acceptance has been something with which the insurance industry has been grappling and, over the last decade or so, insurers have been improving the way it assesses ‘unusual risk’ clients.