The subject of underwriting has been an extremely hot topic in recent times with many advisers raising concerns over the length of time it can take to obtain medical evidence. Where there are medical disclosures within an application this may be difficult to avoid, however when advisers are dealing with a clean application understanding the non-medical limits of insurers can help them to understand which insurers would not automatically request medical evidence. Having listened to the frustrations of advisers, Legal & General have today taken the decision to increase their non-medical limits for income protection, but how do their new limits compare to the rest of the market?
All insurers issue their underwriting limits guidelines which aim to highlight at which point they would request different medical evidence based on the life assured’s age and the sum assured. The exceptions to this are British Friendly, Cirencester Friendly and Holloway Friendly who do not provide non-medical underwriting limits. In general, the higher the sum assured or the older a client is, the more likely it is that medical evidence will be requested by the insurer. As such, where an adviser has a client that falls into one or both of these categories, these documents can be particularly useful to understand what medical evidence will be required in order to set client expectations pre-application. Insurers will generally band the limits across age ranges so that people aged between 31 and 40 for example would have one set of limits whilst people aged between 41 and 50 will have a different, and possibly lower, set of limits.
The graph below highlights the sum assured at which any medical evidence would be requested based on 18, 28, 38, 48 and 58-year-old applicants. We have used these ages as they will generally fall into the middle of insurer age bands and as such more reflective where certain insurers use a 35-40 age band compared to another that might use 36-41. This graph highlights Legal & General’s previous underwriting limits compared to their new limits and just how much they have increased these.
*The Exeter do not automatically request medical evidence for clients age 41 and will automatically request a GP report for clients age 56 and over
When medical evidence is required there are generally four ways that this can be obtained:
- A Tele-Medical
- A Nurses Medical
- A General Practitioners Report
- A Doctors Medical
A telephone medical is the least intrusive as no physical tests will be conducted. A telephone medical can be conducted by the insurers own team of underwriters or a third party. In the current environment this is clearly a preferred method of providing medical evidence. The changes announced by Legal & General result in them removing their tele-medical process, however the level at which they will now request medical evidence is now in line with what they would have previously requested a full medical. This means that only LV= now automatically request tele-medicals on income protection and below we highlight the benefit levels at which they would request this. British Friendly who also offer telephone medicals, do not set a benefit level at which these would be requested and will generally use these where a disclosure is made on the application.
The next most requested medical evidence is a mini or nurses medical. Generally this would include basic medical tests along with a cotinine if the client is a non-smoker and any additional blood tests that may be required. In most cases the nurses will come to the client in order to carry out the medical, however in the current environment this may be difficult especially if the client has symptoms of COVID-19 or is in self isolation. For those that do not offer telephone medicals this will generally be the medical evidence requested at the lowest benefit levels as highlighted below:
*The Exeter do not automatically request medical evidence for clients age 41 and below
At higher benefit levels an insurer may ask for a General Practitioners Report. Where this can be shared electronically this is much easier, however in a large number of cases GPs continue to take a manual approach which means the return of a GPR can take weeks and in some cases months. For younger clients, the high benefit levels at which a GPR will be automatically requested means that very few will be needed unless there is some kind of disclosure on the application. At older ages however, the benefit level required to trigger a GPR request is far lower and as such this is more likely for those with relatively high benefit levels:
*AIG will not automatically request a GPR based on the benefit level
**The Exeter do not automatically request medical evidence for clients age 41 and below and will automatically request a GP report for clients age 56 and over
The world we live in has changed immeasurably this year and it is a shame that it has taken a pandemic to open many consumers eyes to the benefits of income protection. Where someone has symptoms or has been diagnosed they are likely to be postponed until a period of time after they have been given the all clear. Where they have no symptoms it is worth understanding the benefit levels at which medical evidence will be requested as in the current environment the request of any medical evidence is likely to extend the time it takes to put a policy in force quite considerably.
The changes to non medical limits announced by Legal & General today, should hopefully make it far easier for advisers to place business where there is no medical disclosures. These increases bring them in line with AIG who also have particularly high limits. It must be mentioned that the Friendly Societies are particularly strong as most do not automatically request medical evidence at any benefit level (The Exeter do not request evidence up to the age of 42).