Simon Jacobs, Aegon’s head of claims and underwriting, said consumers did not understand the definitions of ‘terminally ill’ as used by insurers in their life policies versus those used by medics.
In an insurer's life policy a terminally ill client is considered to be in the last 12 months of their lives, whereas in the medical sense terminally ill does not give a timeline, it merely means an illness is incurable.
Mr Jacobs said: “When it comes to terminal illness claims we sometimes find customers contact us too early to make a claim, before they meet our terminal illness definition, as their life expectancy is longer than 12 months.
“This can cause frustration for customers during what is already a difficult time.”
Aegon said it supported the removal of terminal illness from critical illness policies, as currently proposed by the Association of British Insurers (ABI), but it believed there was still a “valuable place” for it within a life protection policy.
The insurer had seen the number of terminal illness claims increase in the past five years, accounting for 26 per cent of its life protection claims in 2016.
Mr Jacobs said the industry needed to “continue to treat people diagnosed with terminal illnesses with care and sensitivity, resolving their claims quickly and with as little fuss as possible.”
“Predicting life expectancy isn’t an exact science, so as an industry we need to be more flexible and understanding when it comes to assessing these claims,” he said.
The ABI recently launched a public consultation on changes to its guide to minimum standards for critical illness insurance.
As part of this it is considering removing the model wording for terminal illness.
Aegon said typically someone who met the definition for terminal illness was also covered by one of the other definitions in their critical illness policy.
In the past 15 years, Aegon has only been asked to look at two critical illness claims under the terminal illness definition, one of which could have been paid under the cancer definition and the other was not a valid claim, he said.
Aegon also found in a survey among its clients in March that 41 per cent did not understand the terminal illness feature on protection policies.
“Aegon would fully support the industry-wide removal of this definition from CI policies in the future in the interests of customers, but it’s the terminal illness definition in life protection policies that really needs addressing,” Mr Jacobs said.
Aegon developed a ‘toolkit’ for its claims assessors to help them take a more flexible approach when dealing with claimants.
The service includes offering to cancel a claimant’s direct debit and deducting any unpaid policy payments from their overall claim value when it becomes payable.
The insurer would also consider paying a small lump sum early to help the claimant and their family carry out a final wish, it said.
To avoid claimants having to continuously contact Aegon when making their claim, the insurer also liaises with their consultant on their condition, it added.
carmen.reichman@ft.com
