This is good news from Fidelity Life!
They say that they are leading the way in the New Zealand life insurance space with this announcement.
So what are they doing that is different?
They have announced that when a defined exclusion is placed on Trauma cover, an associated discount will be applied to the cover. If the exclusion is reviewed and removed, the discount will also drop off.
This is coming late 2024 which is soon!
Let’s Explain
So, up until now, if you take out an insurance policy with trauma cover and you have any pre-existing conditions, you may find that you’re excluded from that condition.
For example, trauma cover generally, with most companies, covers serious illnesses or injuries. It’s a popular type of cover to include within your overall life insurance plan. The key issues that it covers are heart conditions and cancers. However, there are a huge number of conditions that are covered by most plans, including the ones with Fidelity Life.
One of the problems with any type of insurance on a person is the exclusions. When you do an application, you’re asked to complete a number of questions, which include previous illnesses or injuries that you’ve had, family history, and multiple other questions. The idea is to determine how much of a risk you are to the insurance company.
If your risk is deemed to be more than the acceptable range, then the insurance company has two options at underwriting. They can either exclude you from being able to claim for that condition, or they can add a loading to the premium. So effectively, you’re paying more.
If you have a loading on the premium, then that’s a fair enough assessment, and you either accept it or you don’t, knowing that you are at a higher risk of having a claim for that condition. If you’re excluded, then the problem has always been that you’re not covered for that condition. However, you’re still paying the same premium that you would have if you had been covered for that condition, assuming no loading.
For example, if you had a history in the family of Parkinson’s, and therefore that was excluded, you will be covered for the other conditions, but not Parkinson’s. But you would still be paying the same premium as somebody else who is covered for Parkinson’s. And really, that just has never seemed fair.
So now what Fidelity Life is doing, or going to be introducing, is a discount if you’re excluded for a condition. This can make a huge difference, especially with some of the more major conditions, like cancers. We think this is a good initiative from the insurance company, and we would fully support this type of action should other companies decide to be competitive and do the same.
