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Saturday, September 1, 2007
Dread diseases

Heart attack, stroke, and cancer are just some of the diseases that have a high public awareness due to the dreadful physical, emotional and financial consequences.
The insurance market’s response has been to offer a contract, which pays a lump sum on diagnosis of one of a number of qualifying diseases to relieve the financial burden of the so-called dread diseases. Some insurers list as many as 36 or so specific conditions that they cover.
Commonly, this forms an accelerated payment of part or all of the sum assured under a life contract. As the benefit is paid on diagnosis, a life office will determine which diseases will be included in the policy and how these diseases will be defined in order to establish whether a claim is valid or not. The underwriting policy of a company will evolve from this.
Risk factors, such as previous and current illness, family history, habits and weight are features that, for the underwriter, assume a different significance when trying to assess the probability of an individual developing a dread disease.
Proposal-form design will reflect this different approach with added questions pertinent to the qualifying diseases.
From the life office’s point of view, the ideal candidate for dread disease cover is someone who has always been fit and healthy, does not smoke, has a family history which excludes premature death, and leads a life style that avoids stress.
Unfortunately, few perfect specimens exist and individuals who have suffered ill health may also be accepted for cover, albeit sometimes at increased rates.
In fact, for some impairments it is possible to offer better terms than for life or disability business as there is not a significant relationship between the illness and the prospect of developing a dread disease. Asthma is a good example.
Conversely, the person who has already suffered a heart attack, stroke or cancer and impairments closely related to dread diseases is likely to be refused.
Underwriting policy towards family history is often questioned, especially when assessing first-class lives. However, statistics indicate that susceptibility to certain dread dis¬eases is, to some extent, hereditary.
Family histories of heart disease, cancer, stroke and diabetes, especially at an early age, will usually merit a rating and when combined with smoking, or, when combined with smoking and overweight, may result in refusal.
The vast majority of occupations, sports and hobbies can be accepted at standard rates, although there are a few where the health and accident risk is sufficiently increased to involve a rating or refusal. The number will be greater where paralysis is an additional dread disease.
Typically, asbestos workers, mining, diving and motor racing are ac¬tivities that warrant further investigation.

Copyright © Insurance Times and Investments® Vol:20.8 1st September, 2007
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