This is great for clients and advisers:
- Clients get to increase cover without having to go through the underwriting process, guaranteeing to some extent that cover can be increased when the need arises without new loadings or exclusions, even if their health has deteriorated. Of course, there are some limits, restrictions and conditions (they can’t increase if they can claim for example) and these differ across insurers.
- Advisers get to increase clients cover with minimal fuss, sometimes by fairly significant amounts (again different insurers allow different increase limits).
Think of benefits like Special Events Increase Benefits and Future (Guaranteed) Insurability Options. Both are hugely valuable, especially for people needing more cover but whose health has deteriorated since initial underwriting.
However, there are time limits within which these increases can be made, requiring action and usually within a relatively short time, or the opportunity is lost.
Unfortunately, there is no consistency of time limits among insurers and, even within insurers, there might be no consistency of time limit for the same benefits across different products.
By way of example, consider Special Events Increase Benefits (also called Life Events Benefits, Specified Life Events Increase and so on) under trauma covers.
Special Events Increase Benefits typically allow clients to increase existing trauma cover (subject to certain limits and restrictions – a topic for exploration all on its own!) when the life insured experiences a defined ‘special event’(for example, marriage, birth of a child or buying a house) without the need for general medical assessment by the insurer concerned.
For trauma covers, time limits range from:
- 60 days either side of the date of the special event – fine if you are aware of the event occurring and its date (Incidentally, the time limit is more generous at 12 months for the same benefit under Life Cover with this provider.)
- 180 days after the special event – more generous but still a good chance it could be missed if policy renewal or a scheduled review, is more than 180 days away; and
- Within 180 days after the special event or within 60 days (in some cases 30 days) after the next policy anniversary, allowing the possibility of two exercise windows.
The longer and more generous the time limit is, the better. The timing of some ‘special events’ is impossible to predict; they could happen at any time or not at all. This makes many special events impossible to ‘diarize’, so more time to ‘discover’ the event and take required action is valuable.
Of course, continually reminding your client of the advantages of Special Events Increase type benefits and the need to contact you as soon as they become aware of a special event occurring is a good idea, but realistically, how many clients would remember, especially if great excitement accompanies the event.
If the time window to exercise a benefit is linked also to policy renewal, this creates a ‘reminder’ opportunity for advisers to contact their clients and ask the necessary questions, even if regular scheduled reviews are some way off. This will allow action to be taken within the set time limits.
Should insurers advise clients of the benefits like Special Events Increase and the time limits involved, in their renewal notices? That would be useful, particularly for those insurers that link a time limit to policy renewal, but I’ve just received a policy renewal notice of my own and there is no such mention.
