Non-disclosure of relevant information is the single largest reason for the rejection of a life or critical illness insurance claim. This true story points up the complications.

Life and Critical Illness Insurance - Tell the insurers everything when you apply.

The failure to disclose information, especially medical information, is

Mrs A was fighting a secondary infection following surgery to remove cancerous lymph nodes in her groin when she received further bad news. Her critical illness insurer was refusing to pay out the £200,000 she was expecting. To understand why and the issues involved it's useful to understand how the events unfolded.

•  In June 2001, Mrs A visited her GP after discovering a patch of flaky skin on her back. Mrs A thought it was eczema. During a brief consultation, her GP thought that it should be looked and recommended a referral to a dermatologist. But soon afterwards the flaky skin healed and Mrs A cancelled the appointment with the dermatologist. Apparently her GP did not express any major concern and some years later admitted that Mrs AP was in all likelihood unaware of the urgency of the referral.

•  Nine weeks later a sales representative from Standard Life made a routine visit to Mrs A at her home. As Mrs A was now alone with a young family, the representative reviewed Mrs A's life insurance cover and suggested that she should also have a £200,000 Critical Illness policy. Mrs A thought that sounded a very good idea and willingly agreed there and then.

The sales representative produced the form and went through it, question by question, writing down Mrs A's answers for her. When it came to the question asking Mrs A to disclose all occasions her GP had recommended referrals for tests or treatments, Mrs A asked the sales representative what Standard was asking for. Mrs A alleges that the representative replied that Standard only needed details of appointments that related to serious conditions. Mrs A did not believe that her referral for what she thought had been eczema, fell into that category - so she did not mention it. She then signed the form honestly believing that she had disclosed everything Standard Life had required.

Standard subsequently accepted her application and issued the £200,000 Critical Illness Insurance policy.

•  Two years later Mrs A was found to have skin cancer. Major surgery rapidly followed to remove the cancer. As her critical illness policy included cover for her cancer, Mrs A then made what she thought was a valid claim.

•  Standard Life subsequently rejected her claim on the basis of "reckless non-disclosure" - the insurers' jargon for Mrs A's failure to disclose her cancelled appointment with the dermatologist.

The Issues

The events that followed showed that Mrs A's application should have included her referral to the dermatologist. So why didn't she disclose the information?

It seems that two aspects conspired to create the situation: Standard Life's sales representative told Mrs A that the question on the application form asking for "all occasions her GP had referred her for tests or treatments" as only relating to serious conditions. That interpretation was fundamentally wrong. The question asked for ALL OCCASIONS. These questions are worded carefully and ALL means ALL - it is not asking the applicant to make a personal judgement as to whether the grounds for the referral were serious or not. The representative was clearly wrong.

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Did you know?
A survey of borrowers conducted by the Daily Mail found that 54% of applicants for loans were refused whilst 43% were offered a loan but at a higher rate than that advertised.

Did you know?
A survey conducted by Experian, the largest UK credit reference agency, found that 54% of applicants for personal loans were refused. Of those accepted for a loan, 43% were offered a higher rate than the rate they saw advertised. That's why, if you're searching for a personal loan, it's a good idea to apply through a loan broker who will know the lenders who'll best suit your circumstances.

Did you Know?
The European Health Insurance Card (available through UK Post Offices) allows UK citizens to receive medical treatment in other EEC member state for free or at a reduced cost, if medical treatment becomes necessary during their visit or if they have a pre-existing condition which necessitates medical care (such as kidney dialysis).

The scheme's intention is to enable people to continue their stay in an EEC country without having to return home for medical care. As such, it does not apply to people who have visited a country for the purpose of obtaining medical care. Nor does it cover medical care that can be delayed until the visitor returns to the UK.

Furthermore, the European Health Insurance Card only covers healthcare which is normally covered by a statutory health care system in the country visited, so conventional travel insurance is still necessary.

Did you know?
Unsecured loans tend to attract higher interest rates. That's because the lender is taking a bigger risk by lending without taking a legal charge against your property. Then, if you default, the lender must resort to the Courts to recover the money you owe.