How to get your vulnerable clients covered

This article is part of
Guide to advising clients with mental ill health

How to get your vulnerable clients covered
The Coach Space via Pexels

Over the past year, consumers have told Financial Adviser horror stories about their treatment at the hands of insurance providers. 

One woman, who has requested anonymity, has been left with no choice but to forego insurance when she goes on holiday to see her family - who are scattered all over the world - because travel insurers simply will not cover her in case she has an episode of mental ill health on holiday. 

This is despite all the medical advice to people with mental ill health to take themselves away on relaxing holiday breaks. 

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"The only two who would offer me cover - one tried to sell me cover at almost £1,000, which was ridiculous - more than my plane ticket", she said. "The other would only cover the loss of my luggage and passport. So I had to go with that, and hope that I did not break my arm or leg on holiday and need hospitalisation."

Another lady, Helen X, told a webinar hosted by Mental Health UK that because she has lived with schizophrenia for many years, she has found insurance doors  shutting on her, despite the fact she has not been hospitalised by it since 1989.

"I've wanted insurance for going abroad, I call up and the person on the other end of the line goes through a set of piercing and harrowing questions ... I've felt pushed into trying to give an answer sooner than I was ready, but each time I give the answer to all the questions, and get to the end I find out they will give me insurance but the exclusions are schizophrenia."

It is too easy to say this treatment happened simply because the clients went directly and not through an adviser. It is also too easy to say this experience is only relating to the general insurance market - and that the retail protection market will give clients a different experience.

Sadly, advisers have found doors shutting in clients' faces because of mental ill health when it comes to life, critical illness and income protection plans, even when it relates to a one-off, historic episode.

One adviser's client made an attempt on their life 10 years ago due to a specific circumstance that led to a period of mental ill health. Because of that, they have been refused life insurance outright by many insurers, despite the fact the man is now happy, has a family of his own and is doing well in his business.

Retail protection problems

Andrew Wilksinson, director of Moneysworth, says: "UK life insurance policies come with a 12-month suicide exclusion as standard, regardless of whether or not the applicant had any mental health disclosures and this is for good reason. But for some people, the 12-month exclusion period effectively creates a barrier to access cover.

"This has led to many people with mental health histories finding themselves unable to access life insurance, which leads to renewed stigma for the client and frustration at being unable to protect their families from the risk of them dying from cancer, stroke, or heart conditions."